Silent PPO is a name used to describe when a contracted payer’s fee schedule is applied by a non-contracted payer or plan administrator to services rendered by a medical provider without that provider’s knowledge.

How Silent PPO Happen

Silent PPO is a complicated repricing scheme, around since the early 1990s, that sees the practice of a contracted network leasing or brokering a contracted payer’s discounted rates, without the provider’s knowledge, to a non-contracted network or administrator. In recent years, it has even gone beyond PPOs to include self-insured employer’s plans, managed care organizations, or other Employee Retirement Income Security Act protected health plans.

They have even gone so far as non-contracted entities leasing multiple networks and “cherry-picking” when selecting rates by applying the lowest discounted rate to the charge. By doing this, the provider is getting paid the lowest amount for services rendered, reducing their revenue and negatively impacting their bottom line. Even further loss comes in the form of the incentives promised to a provider from a contracted payer network.  With a managed care network contract comes the promise of increasing patient volume through listing in a directory, encouraging patients to receive medical services from in-network providers. They also can use financial incentives such as lower co-pays, deductibles, and co-insurance. Non-contracted networks have no such agreement with the provider to encourage patients to receive care from a specific provider or group, adding cost to their bottom line by increasing the cost of attracting new patients through advertising.

Is This Legal?

Currently, although there are a few state-level laws, there is no federal legislation protecting providers from these scam artists. Many states are looking to the National Conference of Insurance Legislators (NCOIL) Rental Network Contract Agreements Model Act to help create laws at the state level.

This model legislation act defines the responsibilities of the group directly contracting with the provider and the non-contracted group as follows:

• Mandating that all third parties utilizing the in-network contract fee also comply with all other terms and conditions of the contract
• Requiring a written or electronic list of all third parties they payer has given or might give, rights to use the contracted schedule fee to. The list must be updated no less than every 90 days.
• The contracting entity must give the third party enough information regarding the provider’s contract to be compliant with the terms, limitations, and conditions of the contract
• Mandating the third party must identify the source of the discount on the EOP or remittance advice
• Requiring the third party of provider contract is notified of contract termination and mandating that the said party ceases discounting the provider’s services
• Having the provider contract with the payer state that the payer entity possibly may participate in an agreement with a third party
• Mandating the discounting of provider’s fees must cease with the date of service when the provider’s contract terminates

Protecting Your Bottom Line

If you are a medical biller, you are on the frontline to catch these unauthorized discounts. 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.

While we wait for legislation to be passed, 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.

The bottom line is that silent PPOs offer no benefits to providers, their practices, or patients.  They are not an insurance company, a health plan, nor do they contract with providers.  They are scammers that take advantage of discounted rates for providers without their authorization or knowledge so due diligence is required to protect your financial bottom line.

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Who is Billed Right?

In 2006, two business partners had a vision of creating holistic services that can help improve medical billing operations. They started by listening to doctors and building a service model around what doctors need the most. As a result, Billed Right’s Revenue Cycle Management (RCM) model was born. The focus continues to be on solving the problem, rather than selling a product, and hence, Billed Right’s advanced RCM model revolves around personalized service in today’s corporate world, while still cutting costs and improving both patient care and practice revenue. No matter what challenges physicians face, we never waver from our goal to be a partner in strategy to promote practice growth.

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