The Secret World of Silent PPOs. Be on The Lookout!

Until recently, network PPOs operated fairly transparently. In return for a #networkPPO steering patients your way, you agreed to discount your usual and customary charges, sometimes significantly. In principle, the more #payercontracts you signed, the more access you had to prospective patients, who, over the years, have made PPOs their #managedcare arrangement of choice.

Silent PPOs (secondary discount markets)

A Silent PPO is a payer tactic to lower reimbursements by accessing the discounted rates of another insurer, generally without the provider's knowledge. Here, PPOs lease their provider lists and associated discounts to organizations that may not have networks of their own.

These discounts often find their way to a very broad range of entities without prior approval from the physician, and often times without any notice, robbing the physician of rightful reimbursement.

The AMA estimates that annual physician losses due to these "silent PPOs" are between $750 million and $3 billion.

Silent PPOs (secondary discount markets) provide NO benefits to physicians, their medical practices or their patients.?A Silent PPO is not an insurance company, not a health plan, and it does not contract with physicians. Instead, a Silent PPO is an organization that accesses discounted rates for physicians without the physician’s authorization or knowledge.

How It Works

A Silent PPO leases insurance company PPO networks, which then allows clients of the Silent PPO to access the discounted rates of the insurers. Those “clients” are typically third-party administrators, claims review and billing firms, and notably, even insurance companies themselves.

Because each insurer has a different set of discounted rates, the Silent PPO searches for the lowest discounted rate a physician has accepted with any insurance company and applies that discounted rate to all of the patients who are members of the “client.”

The patients are not members of the insurance plan the physician contracted with, but instead are insured through one of the Silent PPO “clients.”

Why do insurance companies use Silent PPOs? Three (3) reasons

1. Not all physicians join every insurance company PPO,
2. Discounted rates are different for each insurance company, and
3. Most importantly because insurance companies want to pay the least amount of money possible.

Here is a typical scenario of how a Silent PPO is used:

• Doctor Healer is not a participating provider with Insurer Acme’s “direct” PPO network.
• Because Dr. Healer is not in-network, when she/he submits a claim, Insurer Acme cannot discount her/his rate of pay.
• But, Insurer Acme has joined a Silent PPO, which provides the insurer with access to a database of discounted rates that Dr. Healer has agreed to accept from other insurers.
• Insurer Acme then uses the Silent PPO’s lowest discounted rate to pay Dr. Healer.

Obviously this harms Dr. Healer, because her/his pay is significantly discounted without his authorization or knowledge, AND she/he receives no benefit in return. Silent networks also hurt patients, because when the discounted rate is applied to the insurer’s payment to their physician, the patient ends up paying more in either an unpaid balance or higher coinsurance.

Protecting Your Medical Practice

Here are some red flags to help identify if your practice is being victimized by a Silent PPO:

• ID Card – you don’t have a copy of the patient’s ID card or confirmation they are enrolled in the PPO or health plan listed on the EOB.
• Out-of-Network Patients – EOB lists a discount for someone you know is out-of-network.
• Unfamiliar Insurance Company – EOB is from an unfamiliar insurance company or third-party administrator.
• Collateral Document – you are asked to sign and return a collateral document accepting the payment as payment in full.
• No Insurance Company Listed – EOB does not identify the PPO or plan whose discount is applied.

Just remember, the scenario is unfair to practitioners who sign contracts with a network in exchange for something of value such as, the benefit of the payer guiding patients to them by listing them in their directory, prompt payment terms, and/or streamlined claims processing. Silent PPOs don’t have directories, don’t benefit the practice, and short change the practitioner on reimbursement.

Summary

To lessen the negative impact on your practice’s financial health, review each payer contract for “all payers” language, or anything similar, that would allow this practice of “renting” out discounted fee schedules. If this language exists, request a current list of all affiliated payers allowed access to the negotiated fee schedule to help minimize unauthorized adjustments. #networkPPO #payercontracts #managedcare

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