Published Friday, March 7, 2003
Herald Staff Writer
Unexpected, large insurance claims; a new network of health-care providers; and a change in claims administrators are all reasons Western Pennsylvania Schools Health Care Consortium members are citing for the group's budget deficit that member school districts must cover.
Six Mercer County school districts belong to the consortium and school directors learned last week that the consortium needs more money than what they already pay to cover expenses.
Dr. David K. Monsour, co-chairman of the consortium and superintendent of the Brookville School District, said the consortium has been dealing with financial problems for a couple months. "Nobody should have been surprised," Monsour said. "The districts were all apprised of their responsibility."
Monsour said the districts were advised to put aside their health-care costs savings over the years in case of a "difficult year."
This difficult year is causing officials in the Sharon, Hermitage, Farrell, Reynolds, West Middlesex and Jamestown school districts to scramble to come up with additional money.
Monsour said each district must pay $515.66 a month, per member employee for four months. The amount each district is assessed depends on the number of employees enrolled in the program.
Hermitage will have to pay about $623,000, Sharon will have to pay about $600,000, Reynolds will have to pay about $400,000 and West Middlesex will have to pay about $247,000. Jamestown school officials have not returned phone calls to The Herald.
"Each district that's involved in the consortium has saved hundreds of thousands of dollars over the past years, way more than the additional money we're having to pay right now, and people have to keep that in mind," Monsour said. "In reality, had we not made the changes, we would have been paying more in premiums in the past years."
Monsour said several things happened that put the consortium in a financially precarious position.
The first is that the consortium anticipated having about five "shock claims" a year and actually had 19, he said. Those are claims that exceed $10,000 and could go as high as $125,000 he said.
The consortium voted in July to become self-funded and had to form a new network of health-care providers, which financially stressed its coffers, Monsour said. He said employees were allowed to go to any provider they wanted for six months, and the consortium had to pay 100 percent of the costs.
"We exposed ourselves to excessive payments that we realize now was a mistake," Monsour said.
The consortium was insured with Highmark Blue Cross/Blue Shield for years but members decided it would be more cost effective to self-insure and manage all of the premium payments and earn the interest on its investments, Monsour said.
When the consortium was insured with Highmark, it made set payments annually. At the end of each year if the insurer had paid more in claims than the consortium paid in premiums, Highmark would raise the rates, Monsour said.
When the consortium decided to self-insure it began using a network of health-care providers. Now, Monsour said, officials are looking at the network to see if the discounts were what were anticipated.
The consortium also hires an independent administrator to process claims and tell the consortium how much money to pay, Monsour said.
The Loomis Co. of Wyomissing, Pa., was replaced July 1 by UPMC Health System as the administrator, Monsour said. "We are currently conducting an audit to make sure they (Loomis Co.) paid everything properly and that there were no double payments, etc.," he said. "We have no reason to suspect that they did anything wrong."
Monsour said consortium members will spend their next several meetings investigating what went wrong.
He maintained that even if the consortium were fully covered by an insurance company, the schools districts would still be paying large sums of money.
"I promise you they (the insurance company) wouldn't lose money on you in the long run," he said.
You can e-mail Herald Staff Writer Kristen Garrett at:
kgarrett@sharonherald.com