School District’s Health Insurance Up 245% But They Get A Hell of A Deal on Fixed Costs?

Is Blue Cross paying ECISD for the privilege of being their TPA?

The Edinburg Independent School District (ECISD) is a 4,200 life case located in deep South Texas. Their self-funded PPO health plan is administered by Blue Cross. Like all other managed care plans across the country, ECISD has suffered annual cost increases with serious budgetary consequences to both taxpayers and plan members.

In a ECISD risk management report dated May 2016 three plan funding sources were noted; State, local and plan participants. The state contribution was $75 per plan participant per month, or approximately $3.9 million annually. Local taxpayer funding was an additional $9.2 million and plan participants contributed approximately $7.8 million for a total of $20.9 million.

Fast forward to April 2023, seven years later. Funding required to cover projected claims for the 12 month period ending 12/31/23 totals $51,251,756, or 245% more than 2016 funding. That averages out to a 34% increase per year.

In an March 2023 Blue Cross report to the ECISD Board of Trustees, Blue Cross guaranteed “discounts” of 67.69-69.7% in provider payments. They also guarantee network utilization to be 96.69-98.7%. In other words, Blue Cross has guaranteed ECISD will enjoy discounts of almost 70% on almost 100% of claims. That sounds like a good deal.

Since this case is 100% credible, and the demographics appear to not have changed, what has caused this increase averaging 34% per year while three school districts within a short driving distance have not had an increase during the same period of time?

The difference between ECISD and the three districts down the road provides a clue. ECISD is a traditional PPO managed care plan while the other three districts employ different cost containment strategies including Reference Based Pricing, PCP Centric Care and Cash Pay Point-of-Service.

But ECISD has them beat when it comes to fees to administer the program. Believe it or not, ECISD has a negative administration fee of -$78.82 PEPM! Is Blue Cross paying ECISD for the privilege of being their TPA?

SOURCE: Public Meeting Agenda: March 21, 2023 at 6:00 PM – Regular Board Meeting – BoardBook Premier

This is part of an overall national trend to move away from PPO plans that come with high costs to consumers and offer little in the way of coordinated care”

                                – Blue Cross & Blue Shield of Illinois

Source: CHICAGO (FOX 32 News) November 2015