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American Association of Oral and Maxillofacial Surgeons

Practice Management & Allied Staff News & Materials

Silent and Rental Network PPOs: Identification and Prevention

December 28th, 2012

The AAOMS continues to receive inquires from members regarding contractual discounts from plans in which they feel they are not under contract. One common example is Multiplan, which acquired Private Healthcare Systems (PHCS) in October 2006 and is also a client of Preferred Medical Claims Solutions (PMCS), which is in the business of pre-negotiating low discounted rates with out-of-network providers.

What many members may not realize, they may have signed a contract with a rental network PPO which allows multiple payers to access its network's lowest contracted discount rates. Members may also unknowingly agree to accept discounted rates with "affiliated" plans or networks when signing a contract with a particular plan or network. This is why it is important to thoroughly review provider contracts when negotiating a managed care contract for the possibility of silent PPO and rental network activity. Providers unknowingly involved with silent PPOs and rental networks often receive discounted reimbursement they never intentionally agreed to instead of typically higher in or out-of network fees they had expected. What are silent PPOs and/or rental networks? According to the American Medical Association (AMA), rental networks are not traditional managed care products offered by payers to their clients. Managed care contracts frequently permit managed care organizations (MCO) to rent their rights to negotiated physician discounts to third parties. These third parties may be nonpayers such as "repricers," network brokers, or rental network preferred provider organizations (PPO), which do not sponsor or administer health benefit plans but collect information concerning physician negotiated discounts. They then sell that information to MCOs with which the physician may, or may not, have a direct contractual relationship.

The AMA explains that these schemes exist to market a physician's discounted rates to third party payers such as insurance brokers, third party administrators, local or regional PPOs or self-insured employers. Essentially, silent PPOs are preferred provider organizations that lease their networks from other payers.

How do silent PPOs and/or rental networks operate? The Centers for Medicare and Medicaid Services (CMS) provided an example of how a typical silent PPO and/or rental networks generally work. A practice decided to terminate its contract with a well known medical carrier. Unbeknownst to the practice, the carrier had previously contracted with a silent PPO network to enlarge its PPO in the Mid-Atlantic region. The practice didn't have a direct contract with the silent PPO, but had one with a company acquired by it and ended up in its network by default.

Since the practice believed to be out-of-network, the practice collected full payment up front from beneficiaries at the time of service. But when the patients sought payment from their insurance carrier, it applied the contracted discount because of the Silent PPO affiliation. In this scenario, the practice learned about the discrepancy from unhappy patients who thought they were being taken advantage of by the practice. Physicians may terminate the silent PPO agreement, but it could take months to fix because of the indirect contract.

How should a provider identify whether he or she is a victim of a silent PPO and/or rental network? An office might consider conducting audits on a monthly basis if not more frequently. To implement such a process it will first be necessary to have a comprehensive file of all contracts for which a physician has agreed. As discussed above, billing staff should review carefully rates that are lower than those contractually agreed upon by the physician. Staff should also scrutinize EOBs and patient insurance cards to determine which payers are legitimate parts of the network as defined by the contract. Checking company web sites for hints about which other companies it works with and may rent its network to serves as another way to stay on top of things.

How can a provider prevent the effects of a silent PPO and/or rental network? Review provider contracts for provisions that allow payers to rent a physician's highest discounted rate. The AMA and ADA websites contain a wealth of resources to assist with negotiating managed care contracts including information related to rental networks and silent PPOs The ADA also has available to members, Model Managed Care Contract language. At a minimum, physicians or their representatives should request information regarding a managed care organization's relationships with other PPOs and healthcare networks before signing a contract. Negotiating language in contracts requires payers to provide updated affiliate lists once per month or more frequently if and when payers are added or removed can too be helpful. Also beware of "all-payer" clauses which would similarly allow a PPO to rent or lease its physician network to non-contracted entities.

What if a provider has already been the victim of silent PPO and/or rental network activity? Providers should appeal payments received that appear to have been re-priced and not the amount to which the physician contractually agreed. Providers should be leery of promises from payers or networks to reimburse promptly if one agrees to a discounted rate. The promise may possibly be coming from a rental network that a provider inadvertently contracted with via an intentional contract with another payer. If existing provider contracts do not contain any provisions related to "affiliated" plans or networks, you may not have to accept the discounted rate. Furthermore, with most states having prompt-payment laws, payers must pay clean claims within a designated period of time anyway. However, if a provider contract does stipulate that you have also agreed to contracted rates with that plan's affiliates, then it is possible that the discounted reimbursement must be accepted. At any rate, be careful when agreeing to accept the discounted payment, by doing so, one may be agreeing to that discounted rate going forward. When in doubt consult with an attorney knowledgeable in managed care contracts.

Are there any state laws that can help a provider fight silent PPO and/or rental network activity? There are several states whose laws prohibit silent PPO and rental network activity. For instance, in the state of Oklahoma a PPO Parties to a preferred provider contract are prohibited from selling, leasing or otherwise transferring information about the payment without the "express authority and prior adequate notification" of the other parties. Florida law prohibits silent PPOs unless the contract expressly authorizes this arrangement, and it requires transparency in the process of selling or purchasing information on the networks a physician belongs to and their level of payment. Other states that address this type of activity include Kentucky, Louisiana, North Carolina and Texas. Check with your state Department of Insurance to determine whether your state has enacted similar legislation.

In summation, it is vitally important that providers review and understand contracts before signing them. This protects the practice from the unauthorized use of discounts it has not expressly agreed to and other unintended negative consequences. For additional information, including ADA's model contract language, AMA members can visit the AMA Private Sector Advocacy web site and ADA members may visit the ADA's web site.

Coding and billing decisions are personal choices to be made by individual oral and maxillofacial surgeons exercising their own professional judgment in each situation. The information provided to you through this article is intended for educational purposes only. In no event shall AAOMS be liable for any decision made or action taken or not taken by you or anyone else in reliance on the information contained in this article. For practice, financial, accounting, legal or other professional advice, you need to consult your own professional advisers.