This is What You Thought You Bought, This is What You Bought, and This is What You Are Paying For


The Brownsville Independent School District, a 7,400 life school district located in deep South Texas, recently went out for a Request for Proposals for their self-funded employee health insurance program. The district developed proposal specifications internally, advertised for public proposals, then hired an independent fee based insurance consultant to review the submissions acquired as a result of this process, negotiate with vendors and make recommendations to the BISD Board of Trustees.

Dispite being the largest employer south of San Antonio, the BISD does not employ an in-house professional risk manager or staff with the experience and qualifications to manage a $40 million self-funded health plan. The BISD has historically relied on outside insurance experts to assist in the management of the plan.

Based on the recommendations of the consultant, the BISD awarded the group health contract to a new third party administrator as the best and lowest proposal. The consultant represented to the Board of Trustees that the move would save the district money in administrative costs, as well as an estimated savings in claims of $4.5 to $5 million.

The vendor who lost the business cried foul. On public record, they provided a line by line rebuttle of the consultant’s recommendation and urged the BISD to audit the process and reconsider their decision to move.  This peaked our curiosity. We asked the BISD to provide us information under the Open Records Act.

As of this post, we have not received all the information we have requested, however we have enough so far to place doubt as to the integrity of the RFP process.

In reviewing the consultant’s spreadsheet that was presented to the BISD Board of Trustees, with a comparison to the Administrative Services Agreement that was executed by Rolando Aguilar, President of the BISD Board of Trustees, we find that in comparing the consultant’s numbers to the actual contract, there is an annual difference in administrative costs of $371,349.36. 

And, rather than disclosing line item costs in the Administration Agreement, the costs shown are inclusive of various services / products to be included.  That is much like receiving a telephone bill or credit card statement with the total amount due without a line-by-line transaction report to support it.

Since the information we have obtained seems to not support the consultant’s work product, we question other areas of concern that a prudent risk manager should recognise as a fiduciary duty to his client. We have made several additional Open Records requests but to date have not received the information. The BISD has requested an opinion from the Texas Attorney General on some of the items we have requested, as they should do to protect trademark secrets, privacy, etc.

Unfortunately, after reviewing the Administrative Agreement we conclude that some of the contracts involved in the BISD health program will probably be unavailable to public inspection. It appears that the BISD is a third party beneficiary of some of the contracts, and therefore not a party to the contract. If that proves true, not even the BISD will be able to read, review and analyze some to the contracts in place. And, it is our opinion that when you cannot review a contract, you are probably paying more than you should.

BISD Consultant Presentation  BISD Consultant Presentation vs Signed Contract  Consultant Presentation to BISD Board  Exhibit B-Compensation BISD MAA

Editor’s Note: This is just a preliminary review of material received from the BISD. There is much more work to do here in analyzing the data submitted during the RFP process. We will attempt to find every single line item cost associated with this $40 million group health plan. If there are any hidden revenue streams, we will find them in time.

Of particular interest will be the stop loss policy (why did the consultant show only ING? Why did ING increase premium 10% with the TPA they were doing business with versus the TPA who was awarded the business? Was there a better stop loss proposal, with better contract language and lower premium? If so, why was that not shown on the spreadsheet?) Of additional interest will be the Pharmacy Benefit Manager contract – are there fees/commissions within the PBM contract, and if so, what are those fees? Lastly, the PPO contracts will provide useful information as to the claim that the BISD “will save $4.5 – $5 million next year with the new PPO network.”

The BISD Board of Trustees has decided to hire an outside independent auditor to review the BISD health plan, and we applaud that decision. We hope that this is not just lip service to the tax payers of Brownsville.