Beware of silent PPO scams
By Deborah Green, Esq.

I signed up with a PPO (preferred provider organization) a year ago and am having trouble getting paid what I am owed. For example: I collect 20 percent co-pay from my patient, bill the insurance company for the remaining 80 percent, and then I receive a discounted payment from the patient’s insurance company with an EOB statement (explanation of benefits) saying the patient is entitled to the PPO discount. What’s going on?

You are a victim of what is known as a “silent PPO” scam. These scams are costing providers tens of thousands of dollars to which they are entitled, and providing a financial windfall for certain unscrupulous insurance companies and brokers.

The scam works in this way: After you bill your patient’s insurance company for the co-pay, the insurance company asks a discount broker to find out whether or not you are a party to any PPO contracts. If the broker learns you are a provider for a PPO, the broker will try to buy your discount-fee information from the PPO and sell it to the insurance company.

The insurance company then sends you a discounted payment with an EOB stating your patient is entitled to the PPO discount. In some cases, the insurance company contacts the PPO, and the PPO submits a discounted payment to you claiming the patient as its enrollee.

Your billing department then accepts the discounted payment because, although it can verify whether your patient is a member of the PPO, it cannot as easily verify whether the insurance company belongs to the PPO and is therefore entitled to the discount.

Everyone is making money on this transaction except you: The insurance company gets paid by paying you less on the claim than what you are entitled; the PPO gets paid by the broker for your discount information or directly from the insurance company for processing the claim on behalf of the insurance company; and the broker gets paid for supplying the insurance company with your PPO discount information.

You are losing money because you should have been paid the full 80 percent for your patient’s bill — not the discounted amount.

One way to avoid this problem is to be careful when you enter into a PPO agreement. Determine whether or not the PPO is reputable before you sign.

Reviewing the PPO contract for the following items may be time-consuming initially, but it will save you a lot of money and aggravation in the long  run.

SIGNS OF A GOOD PPO

The following characteristics are generally indicative of a legitimate PPO:           

• Provider directories are current.

• Provider directories are made available to you before you sign the contract.

• Directories are updated at least quarterly.

• You receive a list of payers at contract signing.

• You receive a list of payers before you are required to give a discount.

• You receive an updated list of payers regularly.

• You have permission to approve new payers, and if you do not approve of the new payers, you may opt out of the contract with no penalty.

• Members have ID cards that identify the member, the PPO, and the PPO telephone number in order to verify eligibility.

• The PPO has a large staff nationwide. A large staff indicates the PPO is concerned about provider and customer relations.

It should have about one customer service employee per 3,000 covered lives; one claims adminis-tration employee per 3,500 covered lives; and one provider-relations employee per 1,200 providers.

• The PPO should credential providers according to set standards and practices. The process should take 60 days to 90 days and require re-credentialing at least every two years.

• The PPO should have its own internal utilization management/quality assurance (UM/QA) program.

• The PPO should present its fee schedule as the basis for negotiation.

• The PPO should offer training and educational programs.

PROBLEM SIGNALS

The following characteristics are often indicative of a problem PPO:

• The PPO does not have a payer list or will not give you one.

• Payers identify themselves as PPO members via the EOB only after you have treated their alleged members.

• The PPO does not issue ID cards, will not provide you with a specimen card (or refer to it in your agreement), and has no eligibility verification hotline.

• The PPO has a small staff. (This is almost an immediate giveaway the PPO has been set up to resell provider numbers.)

• The PPO does not credential its providers.

• The PPO claims to have a national network, but contracts out all its UM/QA functions.

• The PPO does not have a fee schedule. It starts negotiations by asking how much of a discount you are willing to give.

• The PPO is indifferent to the efficiency of your practice.

A number of attorneys are acutely aware of this problem. Please contact a healthcare attorney if you feel you are a victim of such a scam.

Deborah Green, Esq., practices law in New York and Florida. If you have any questions concerning legal healthcare issues, e-mail her at healthattorney@aol.com or call 954-923-0923.

DISCLAIMER: This column is provided for educational purposes only. The information presented is not as legal advice with respect to any matter and no attorney-client relationship is hereby established.