TRS ActiveCare Touts Unamazing Provider Discounts

“The size of TRS’ membership also enables TRS to negotiate larger discounts with providers. In fiscal year 2018, providers submitted $12.5 billion in charges. TRS reduced the cost of care by $5.2 billion by negotiating lower prices with providers through its third-party administrators.” – Teacher Retirement System of Texas Self-Evaluation Report

By Bill Rusteberg

This equals to a 58% PPO discount. Reference Based Pricing averages 70-80% using 120% MC benchmark on our book of business.

This is more proof size means nothing – economies of scale have zero effect on health care prices in this instance.

The traditional status quo practice is “Size matters enabling us to negotiate better pricing.

At the end of the day this really isn’t true because a 10 life group health plan accesses the same PPO network as a 400,000 life case with both receiving the same PPO pricing.

Our practice is “We’ve decided to pay less on a transparent, fair and reasonable basis. We don’t need permission to do so. We don’t negotiate our own decisions. Nor do we need provider agreements. Providers can charge anything they want, it’s their choice and we have no problem with that. Our members have choices too.”

We call this the Grocery Store Financial Model (GSFM). There are no agreements / contracts required, prices are set by the seller, buyers have freedom to accept or reject pricing, and there are no third party intermediaries setting rules. Supply and demand sets prices and preserves individual freedom.

The GSFM model taps into consumerism long missing from traditional managed care plans.

Texas educators are facing many of the same issues as the rest of us towards managing health care. One major difference is they have ceded to centralized control (Austin) with little ability to influence versus local control with greater ability to influence. All healthcare is local.

TRS ActiveCare discussion starts on page 90:

www.sunset.texas.gov/public/uploads/files/reports/Teacher%20Retirement%20System%20of%20Texas%20SER.pdf

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