Emergence
of the Silent Preferred Provider Organization
In Brief: The silent Preferred Provider
Organization (PPO) is a recent managed care trend that physicians should be
aware of as it can have a significant impact on reimbursement.
In
the early 1990’s, a new managed care trend, the silent preferred provider
organization (PPO) emerged. A silent PPO involves unauthorized and
undisclosed selling of PPO provider network lists along with the accompanying
negotiated discounts for that network to third party payors and brokers.
The third party usually does not have any obligation to abide by the original
PPO’s contractual agreement with physicians, allowing them to receive the
benefit of paying a discounted fee to a physician without the physician
receiving the benefit of a patient base.
In
most instances, a physician only becomes aware that he or she was enrolled in
a silent PPO when he providing services to a patient who is not covered by the
PPO. When the physician bills the patient’s insurer, the insurer
contacts a third party insurance administrator or broker to determine if the
physician is part of any PPO network with a negotiated discount. The
patient’s insurer then pays a fee to the PPO to use its negotiated discount.
Instead of receiving the fee that the patient’s insurer was charged, the
physician will receive the discounted PPO fee even though the patient was not
a member of the PPO. The silent PPO is successful largely because most
physician practices do not have the resources to verify that a patient is
enrolled in the PPO listed on the explanation of benefits (EOB) received with
the discounted reimbursement.
This
practice may violate a contract in which a discount applies without a health
insurance plan reciprocating for participation in published directories of
participating physicians, exclusive practice relationships, purchase plans,
and other like benefits. The Academy urges members to carefully review
their managed care contracts, giving particular attention to “all payor”
clauses that may permit the managed care organization to sell or rent its
negotiated discount. Additionally, physicians should investigate any
instances when payment is less than what had been negotiated in their contract
with a payor.
The
American Medical Association (AMA) has become involved in this situation and
was successful in getting silent PPOs banned from all Federal Employee Health
Benefits Plan contracts. North Carolina is the only state that states by
law that silent PPOs are an “unfair trade practice.” A recent case
heard by the 11th Circuit Court of Appeals declared that silent
discounts are unacceptable if the provider is not aware of and has not agreed
to the discounted fee.
For
additional information on silent PPOs, contact the Academy
national office at (312) 464-9700 or via e-mail: info@aapmr.org.
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