The school district could face a potential $20 million increase in its health insurance expenses in the 2019-20 fiscal year for switching its broker, warned the district’s health program manager in a correspondence to school board members.
School officials switched the district’s broker from Liberty Benefit Advisors to CBIZ last month. Brian McTear, president of Crumdale Partners, the health program manager, claims that could cost the district millions beginning on Jul. 1.
McTear’s firm provided Liberty Benefit Advisors with access to its proprietary contracts and vendors to create the district’s self-insurance program. His letter states the proprietary program is only available to brokers selected by the firm.
“While Crumdale will continue to make its program available to Paterson through 6/30/19, because CBIZ is not part of the Crumdale broker network we will not be able to continue making the program available for the next renewal year,” says McTear in his email. “Therefore, Paterson will need to find all new vendors for its health benefit plan effective 7/1/19, including the medical network, third party administrator, pharmacy benefit manager, stop loss insurer, advocacy programs, etc.”
“Crumdale is not and has never been a program vendor directly contracted by the district. Its projection of a $20 million cost to the district by changing brokers is purely speculative, at best, as no analysis has been offered to show how that figure was determined,” said district spokesman Paul Brubaker. “The Board of Education held an open and transparent process in which seven proposals were submitted. The board ultimately selected CBIZ, a large nationally-known firm whose expertise and institutional heft will serve district employees well in the provision of health benefits.”
School board members did not directly respond to McTear’s email.
“There’s not much I can say right now,” said school board president Oshin Castillo. She said the firm’s email to board members has been forwarded to the district’s lawyers by the superintendent for review.
“I’m glad I voted no,” said school board member Emanuel Capers. He said he had a gut feeling there was something wrong when some of his colleagues aggressively pushed for CBIZ to get the contract. “It just didn’t feel right.”
Capers said he was one of several members to vote against switching the insurance broker. He said board members were not given enough time to properly vet the different brokers vying for the district’s business.
“A lot of our employees are going to be impacted by this,” said Capers. Many of his colleagues were unhappy with the services provided by Liberty Benefit Advisors. Last October, some teachers complained about being denied medical procedures and others found medical providers were not being reimbursed by the district’s third-party administrator.
The health insurance program covers 3,800 employees. Last year, the district dropped out of the state health plan to create its own self-insurance program to save money. School officials at the time said the district would save $61 million or $20 million per year by creating a self-insurance program.
Updated 8:35 a.m.