School District Learns Health Care Costs Tied To PPO Contracts

It’s all about the margin………………………….

A Texas school district was interested in learning why their health insurance costs increased dramatically when they changed their plan administration from Blue Cross to an independent TPA.

The district hired Sagebrush, an independent audit firm, to find out why.

The audit concluded higher costs were primarily due to moving from the Blue Cross PPO network to a regional rental network.

The Sagebrush review did not include an audit of PPO agreement/s to claims. Were paid claims contractually accurate? We will never know.

The district now understands health care costs are dependent upon managed care contracts they can’t audit.

The cost of health care is entirely dependent upon what you agree to pay for health care (as opposed to health insurance). When you cede that authority through managed care contracts, your cost of health care becomes dependent on what someone else tells you to pay.

Meanwhile two small school districts within easy driving distance of this district don’t use PPO managed care contracts at all. Instead they pay transparent pricing based on cost plus a margin. And they set the margin.

(BTW these two districts use the same TPA as the one audited in this instance).

When you set the margin you can better control cost. When you don’t, you don’t.