Strategies to Fight Silent PPOs
Medical practices are routinely victimized by silent PPOs, but there are strategies available to guard against these predators.
Preferred Provider Organizations (“PPOs”) are frequently among the best payors. However, physician practices must be vigilant to assure that only patients entitled to a discount are receiving the negotiated fee. Otherwise, your practice will be extending a discount to individuals and payors who should be paying your billed charges in full.
There are several ways a practice can protect itself from silent PPOs. One of the most obvious ways is to heed the old saying that if something appears to be too good to be true, it probably is. Insurance is a very competitive industry, and most employers base their purchasing decision predominately on price. To keep prices competitive, networks and insurers use their purchasing power to reduce fees to physicians and other providers of healthcare. If a network offers fees significantly above those of other payors in the area, you must be especially vigilant. How can they compete if they are paying you so much more than other networks or insurers? One probable answer is that they are not competing at all. Their business plan is simply to reduce the fees otherwise paid by insurers to your practice, and to take a profit from selling the discount they have obtained from your practice through the preferred provider agreement.
You should have competent legal counsel review each managed care contract. In this regard, the definition of “Payor” in the PPO participating provider agreement is critical. Many plans define a “Payor” as “an individual, organization, firm or governmental entity, or self-insured account that has executed an agreement with” the PPO. This definition would allow the PPO to run a “silent PPO”.
To address this issue, the definition of “Payor” should very clearly provide that the term relates solely to the PPO, affiliated entities in the insurance company holding group, and self-funded employee benefit plans that use the PPO as an administrator. It would be helpful if the definition of “Payor” specifically provided that the discounts being negotiated will not be accessible to any party other than those described above. Some health plans are willing to provide a list of self-funded employers which have access to these discounts. It would be prudent to assure that such a list is given, and to check the list regularly against explanations of benefits received, to assure that the discounts negotiated with a given PPO are not being “rented” to other parties.
In addition, the participating provider agreement should provide that the PPO discount is only available to enrollees who present an insurance card with the PPO’s logo on the card. If your practice copies the patient’s insurance card at the initial encounter (especially when the patient is a new patient) and compares the card to the explanation of benefits received, a silent PPO can be detected relatively quickly. If the PPO’s logo was not on the insurance card, then no PPO discount should be allowed. This precaution will help your practice administrator focus quickly on which preferred provider agreements should be analyzed first.
Medical practices are being pushed to limit with escalating costs and declining reimbursements. Make sure that your practice only provides a discount to payors that are entitled to the discount.
ABOUT THE AUTHOR: Dennis Hursh
Dennis Hursh is a principal in Hursh & Hursh, P.C., a Middletown, Pennsylvania law firm concentrating on representation of physicians and physician group practices. He is an experienced, proactive, hands-on advisor who protects physicians and their practices in an increasingly challenging economic and legal environment.
Dennis offers tailored legal services for physicians and medical practices in Pennsylvania. He is dedicated to serving the needs of physicians.
Hursh and Hursh, P.C. is one of just two law firms credentialed by the Pennsylvania Medical Society to provide contract review services for members of the Medical Society. Dennis was also credentialed by the American Medical Association for these services, as part of the AMA’s Doctor Resource Network, before the AMA discontinued that service.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.