Independent review says commissions on KISD Health Plan too high - KXXV-TV News Channel 25 - Central Texas News and Weather for Waco, Temple, Killeen |

Independent review says commissions on KISD Health Plan too high

KILLEEN, TX (KXXV) - UPDATE:  An insurance broker Killeen ISD had a previous relationship with was paid significantly more in commissions and fees than what the district recommended when it chose its employee health insurance plan for 2012.

That was revealed in an independent review the school district commissioned of its own insurance proposal process.
The Texas Association of School Business Officials said KISD stipulated in its Request for Proposal for Group Health/Medical in 2012 "The broker compensation should be no more than a flat .25% of billed premium and must be included in the proposed premiums" of the employee health insurance plan.

But the report says the commission and fees paid to the broker, which it didn't name, were $170,799 on premiums paid of $19,661,551.  That means the commissions and fees paid were .87%, considerably higher than the maximum set in the RFP.

The broker also got $153,135 more in commissions for dental, life and disability insurance, according to the review.

The report advised KISD require a response from that insurance company to make a determination why it had to pay that additional percentage.

A school board trustee asked that question last week, according to an email from the Superintendent's office.   

"In the board workshop on Tuesday, a Blue Cross Blue Shield representative stated that in 2012 they missed that there was a change in the RFP to .25%, related to commissions paid to a broker.  At the same time, the RFP did not require a specific rate, rather it suggested a rate.  In 2013 the payment to the broker reflected the .25%," the email stated.

A second email from KISD said a board member asked whether the commission in 2012 caused the premiums to be higher that year.  A BCBS representative explained the commission was included in the rates presented to the school district. 

The independent association that wrote the report commended district leadership for the foresight to identify the need for such a review, but also recommended a number of changes in the process KISD uses to get proposals for health insurance.

It suggested the district hire an insurance consultant to help guide the process, give insurers more lead time to prepare a greater number of competitive bids, consider widening its market to get more response, and inquire with other school districts to get vendor recommendations.  It also advised the district to spread out its advertising of the RFP, rather than posting it two consecutive days.

The report also admitted "the District's relationship with the Insurance Broker and the Request for Proposal (RFP) process for health insurance directly affect the employee health insurance plans offered to district staff.

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