‘Second opinion’ protects Montebello health benefits

By Frank Wells

Many districts experience sticker shock on out-of-pocket health care costs as insurance rates continue to rise. The Montebello Teachers Association did something about it.

Two years ago, the Montebello Unified School District (MUSD) received through its insurance broker 2008-09 rate renewals for both Anthem Blue Cross and Kaiser Permanente. The quoted increases were a staggering 29.71 percent for all Blue Cross plans, along with a steep but more manageable 3.9 percent for Kaiser plans. The new rates would add an additional $7 million in health costs to a district already grappling with the impact of state budget cut. Since the health benefit plans were capped, the new costs would all be passed on to employees.

Montebello Teachers Association (MTA) President Dianne Garcia-Stevens recalls the shock she felt when, as a member of the district’s insurance committee, she was initially presented with the new rates. “Just the prior year our members had gone from zero out-of-pocket costs to $700 per month. Now they would be facing at an out-of-pocket cost of $1,469 per paycheck,” she says. “We knew the new rates would not be sustainable. We decided to find out if they were justifiable and what alternatives, if any, there might be.”

They finally settled on CalPERS, a statewide pool that provides health benefits to all state employees, as well as to public agencies such as schools. In addition to offering coverage under the same Anthem Blue Cross and Kaiser networks that were previously available to MUSD employees, CalPERS would also provide options of two Blue Shield HMOs and an additional Anthem Blue Cross PPO that would offer significantly reduced costs.

To reach this solution, Garcia-Stevens presented the situation to CTA’s Health Benefits Advisory Coordinating Committee, where she was coincidentally (and fortunately) a new member. The group immediately suggested that she ask the district to get a “second opinion” from consultants to the California Education Coalition for Health Care Reform (CECHCR) — a group CTA and other school labor and management groups had formed in 2005 to improve health care quality and reduce costs through education, training and advocacy.

The MUSD insurance committee was receptive to the idea of a second opinion by the CECHCR consultants. MTA and CSEA agreed to split the cost of the necessary investigation and analysis, and the district agreed to open all insurance information for the review. Time was of the essence, as any delay in finding a solution would by default put members under the newer expensive rates for the start of the 2008-09 year.

Despite some initial resistance from the district’s insurance broker in providing all the necessary claims history information, the consultants were able to find some key reasons for the inflated renewal rates. First of all, charges for non-physician service claims like chiropractic and podiatry were far higher than expected and had not been monitored or shared with the district by the broker; in fact, the total utilization for all professional non-physician claims was 40 percent more than the amount spent for all physician visits.

Another issue was the broker's failure to monitor potential abuses by out-of-network providers. Of the ten highest-paid non-network providers, eight were chiropractors and one was a physician who received exorbitant fees for treating just two claimants (the same physician had also been disciplined for fraudulent medical records, among other infractions).

The unusually high claims had been going on for two years, “It was extremely troubling that the broker had not alerted us to these issues, nor had worked to help us address those problems in a timely manner,” says Garcia-Stevens.

Although out-of-network issues and potential overcharging were a problem, the single largest factor in Montebello’s increasing health care costs was that the district was in a stand-alone risk pool for its medical benefits. The CECHCR consultants strongly recommended that MUSD consider migrating the same or a similar plan to a larger risk pool. Several regional and statewide pools were considered, most of them offering plans through Anthem Blue Cross and Kaiser. However, most of those pools would have required too long for migration and implementation. Fortunately, CalPERS was able to provide a more immediate solution.

Throughout this process, MTA kept its members informed and held well-attended area meetings in which information and feedback about the benefits situation could be exchanged. Members understood and overwhelmingly supported the proposed change to CalPERS.

In the end, MUSD was able to save $12.1 million on its 2009-10 renewal rates, with the new rate being actually $4.9 million less than the previous year. The savings were generated without any significant changes to benefits, access or quality.

“Maintaining the best possible health plan has always been a top priority for our members,” says Garcia-Stevens. “Getting a second opinion and joining a larger pool allowed that to happen.”

• Make sure the district and employee groups are getting accurate and complete utilization information for each available plan from the district’s insurance broker.
• Understand the broker’s contract and financial incentives.
• If renewal rates seem high or unjustified, consider getting a second opinion.
• Make sure your plan is part of a pool large enough to spread risk and volatility.
• Get informed. Health benefits training is available through CTA and through CECHCR.