Ever have the experience of receiving a payment from “XYZ” insurance company that was mysteriously reduced? You find that the explanation of benefits (EOB) notes something like, “Provider is contracted with ‘ABC’ and has agreed to XX% discount.”
You know about “XYZ,” their fee schedule and their benefit design, but you have never heard of “ABC.” If this scenario sounds familiar, there’s a pretty good chance you’ve been dinged by a “silent” PPO.
Before I knew any better, I signed up as a “participating provider” with an outfit we’ll call ABC. A chiropractic managed-care plan I was participating with at the time sent me an addendum to my contract, saying that signing up would expand the number of patients that could see me. So I signed on.
In reality, I wasn’t deluged with new patients who carried ABC member cards. In fact, I never saw a single patient from ABC. But I did see a change that came from signing on with this company. I soon noticed that some payers would discount my fees because I was a “participating provider” with ABC. I was even taking a “double hit” with payers in a decent preferred provider organization that had nothing to do with either ABC or that “other” chiropractic plan. Again, the EOB merely stated that an additional XX% discount was applied because I was a “participating provider.”
I hustled back to my contract with ABC and discovered first, that I was stuck with the discounted reimbursement, and second, that I couldn’t get out of it for 60 days after I fired them. So I took my lumps, sent off the termination letter and ended up somewhat wiser and much more careful about silent PPOs.
What They Are
Silent PPOs are like reverse “spams.” They exist solely as lists of names of doctors that are in turn sold to payers, who then extract a discount from the provider. The silent PPO never informs the practitioner about the deal, it never provides credentialing or quality assurance, and it never directly brings patients to the front door. It exists only to create a discount that you never agreed to with an insurance company that you don’t know. Silent PPOs are bad news.
Silent PPOs can also damage relationships with patients. Silent PPOs may give the impression of “quality” to health plan members in that you show up on some list somewhere, but in fact the PPO has never really credentialed you — or perhaps more importantly, the other doctors on the list.
In addition, patients generally assume their insurance is taking care of their bills. Often, patients are chagrined to learn their doctor is not being paid promptly, fairly or fully. This may prompt patients to avoid making appointments for needed healthcare.
Although it’s impossible to determine a precise dollar figure, the American Medical Association (AMA) estimates that health-care practitioners nationwide have lost between $750 million and $3 billion annually since silent PPOs became prevalent in the early 1990s.
What’s Being Done
Efforts to silence the silent PPOs are currently being made on a number of fronts. The California Chiropractic Association lobbied for the passage of legislation, SB 559, which went into effect on July 1, 2000. The law says that on the first renewal or amendment of any PPO or other networking agreement, the PPO or network will have to give health-care practitioners the ability to “opt out” of any list sold to third-party payers who do not “actively encourage” patients to use the PPO’s list of doctors.
Also in July 2000, the board of directors of the American Association of Preferred Provider Organizations (AAPPO) passed a policy opposing silent PPO activity. The policy states that PPOs and providers must disclose all contractual intents and purposes when applying contractually permitted provider discounts. Representatives of the AAPPO say they believe it is in the best interest of the providers and PPOs to pursue contractual relationships based on fair business practices and principles to ensure a mutually satisfactory business association.
The AMA, which is currently seeking formal determination on whether silent PPO activity constitutes fraud, was recently successful in having silent PPO provisions removed from all Federal Employee Health Benefits Plan contracts. Clearly, this issue is being attacked on a number of fronts simultaneously, which can only be beneficial to the chiropractic profession.
What You Can Do
The AMA, in conjunction with the American Hospital Association, offers several suggestions to protect doctorsfrom the unauthorized use of negotiated discounts by silent PPOs.
These recommendations include:
- Ensure that all PPO patients eligible for discounts are steered toward using in-network physicians. For example, PPO patients commonly receive a financial incentive to use network physicians.
- Extend discounts only to patients with PPO identification cards.
- Require the PPO (within the physician contract) to provide timely notice of changes to the list of payers authorized to receive the network discount.
- Require the PPO to disclose any discounts applicable to a PPO patient at the time the doctor’s office verifies coverage.
The AMA also recommends that you scan your contracts for “all payer” clauses, which typically require you to accept the discounted rate as paying in full from any payer. This may permit “selling” or “renting” the negotiated discount. However, even if a contract does not contain an “all payer” clause, you may still be at risk.
You should seek more information by asking direct questions of your PPO representatives about their relationships with payers before signing a contract. Contracts should not be assignable without your express written consent.
The best advice to avoid being taken by a silent PPO is to be careful about signing up with every plan that comes along. If it looks like a silent PPO, it probably is.