Look Out For Silent PPO Activity – Revisited

February 18, 2006

One of the worst problems facing providers is silent yet possibly financially dangerous. As the name suggests, silent PPOs often go undetected and have the potential to take a significant bite out of your earnings without so much as a peep from the provider.

Silent PPO payer arrangements offer patients discounted fees without requiring them to access provider services. Under such arrangements, a third party obtains a database of preferred provider rates from a managed care organization (MCO) or discount insurance broker. The MCO sells or rents its PPO provider network to the third party or insurance broker.

Keep an eye out for the following red flags that could suggest silent PPO activity:

  • Scrutinize patient insurance cards. Many PPOs list the companies to which they lease their networks on patient insurance cards.
  • Ask the PPO who accesses its network. Every PPO should know every company that accesses its provider network. Obtain a complete and current list of the PPO’s payer partners, and make sure the PPO states that the list is consistent for all providers in its network.
  • Check company Web sites. PPOs often retain their company names even after they are acquired by other PPOs or payers. Check each PPO’s Web site for clues about which other companies it works with or which companies to which it might lease its network.
  • Monitor PPO use in specific geographic areas. Ask consultants or third-party administrators to notify you if a payer uses different PPO discounts for providers in the same area. This is a red flag for PPO stacking, a silent PPO tactic in which a payer “cherry-picks” from various provider networks to find the best discount.

Use contract negotiations and language to address silent PPOs

Last week, we discussed some ways to look out for silent PPO activity. This week, we’ll provide you with contract language to use to protect yourself from silent PPO discounts.

Providers should consider:

  • specifying the objective of the contract (i.e., the provider offers discounts in exchange for steerage of patient volume);
  • requiring different coverage for in-network and out-of-network providers;
  • requiring that the PPO’s name be included on all member ID cards and that the card be presented at the time of service;
  • requiring ID of a payer’s use of the PPO network on the EOB;
  • attaching a complete payer list to the contract and requiring the plan to provide notice of changes to the list;
  • Ensuring that the definitions in the contract reflect the provider’s intent of giving discounts only to payers who have PPO plans or policies;
  • defining “payer” clearly to identify the entity obligated to pay and including language stating that the hospital has a right to take legal action against that entity;
  • including a provision requiring the forfeiture of all discounts that do not comply with the PPO agreement;
  • indicating that the PPO must require all payers to adhere to the terms of the PPO agreement;
  • including a clause allowing the provider to audit the PPO’s records related to patient activity;
  • incorporating language restricting the plan and any claims-paying organization with which the plan is affiliated by ownership or contract from leasing or selling the payment rates established under the agreement;
  • include a clause that restricts the sale, access, or disclosure of your proprietary discount information to the payers you specify in the definition section

Please Note: This article and related tips was excerpted from HCPro’s monthly newsletter, Managed Care Contracting & Reimbursement Advisor, on which I am on the Editorial Advisory Board. If you deal a lot with managed care, this is a must-have resource in my opinion.

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