The insurance group representing school districts pinches every penny to reduce its deficit.

After learning in December that the Municipalities, Colleges Schools Insurance Group (MCSIG) was facing a $12 million deficit due to record medical insurance claims last fall – $11.6 million alone in October – the board of directors embarked on finding ways to make cuts and recoup money any way possible. Combined with a reduction in claims in March from members at schools, community colleges and cities, the deficit was just under $7.3 million.

“We’re headed in the right direction,” Borden Darm, a consultant with Keenan & Associates, told the board at a meeting in Salinas on April 24.

A contract with Salinas Valley Health that began in March last year resulted in an 18.6-percent cost reduction in claims compared to other providers.

One of the cost containment measures MCSIG initiated as of April 1 for future savings was to limit who is eligible for coverage of GLP-1 drugs, used to control diabetes and have become popular for weight loss. Monthly claims for the drugs were around $400,000. With the limits they could save between $75,000-$100,000 per month.

MCSIG also contracted with a company called WellRithms that analyzes bills from health care providers to find overcharges and billing errors. WellRithms attempts to get the money back, retaining 25 percent as its fee. MCSIG could net an estimated $4.5 million from the service.

Not all the cost saving measures were well received. The board voted 14-10 to use a third-party vendor, Transcarent, for cancer care, beginning July 1. Under the contract, members must have their case reviewed by Transcarent which decides where the member will be treated, depending on the type of cancer, at partner facilities. It could be within Monterey County, or a neighboring county.

MCSIG President Steve McDougall said members and their dependents could receive treatment at a facility elsewhere “with fantastic, world-class, fabulous outcomes,” adding that the treatment is fully covered with no deductibles or co-pays. Last year MCSIG experienced $12 million in claims related to cancer – it’s estimated it could see $2 million in annual savings using Transcarent.

Lynda Horejsi, representing the Monterey County Office of Education, pointed out that MCSIG features only preferred provider organization plans, known as PPOs, which allow a member to choose providers. “The whole point of choosing a PPO is to have a choice,” she said, voting against the proposal.

Members were told to expect a premium increase of between 10-16 percent in the next fiscal year, beginning July 1. A final decision on the percentage will be made in June.

One member asked whether to expect any additional assessment charged to member agencies in the future, after the board voted last December to assess member districts a total of $6.7 million to address cash flow issues. “We’re going to do our darndest to never let that happen again,” McDougall said.