This article was written by Tony Mira of Anesthesia Business Consultants.
AETNA ALERT
Under a proposed settlement that Aetna reached last week with organized medicine, Aetna beneficiaries, and other plaintiffs, the insurer would pay out $120 million. The class-action lawsuit was based on the same spurious Ingenix database rates paid to out-of-network providers that gave rise to the earlier United Health Group settlement and to pending class-action litigation against Cigna and WellPoint.
When the tentative settlement receives final approval from the federal District Court in New Jersey, we will provide you with further information.
Everyone involved in the healthcare industry will inevitably learn about the confusing aspects of medical health insurance. Just when you thought you had a grasp on the insurance marketplace another complexity presents itself. Sometimes what you might have thought of as an insurance plan turns out not to be insurance at all.
There is a variety of well-known insurance plans available in the market today. Some of these plans are government-run, starting with Medicare and Medicaid. Others are private or commercial managed care plans offered by entities that include Blue Cross and Blue Shield, United Healthcare or Aetna. Then there is a less well known group of companies that market themselves as health benefit plans but that are in reality simply claims repricers, or discount brokers and vendors, i.e., “rental networks” or ”silent PPOs.”
What is a “Rental Network PPO?”
A rental network preferred provider organization or medical discount network or silent PPO or repricer is not an insurance company; nor does it actually pay for any of the patient’s medical bills. Rather, it charges a fee to non-contracted third party payers and others to access the physician’s contracted rates without direct authorization or, much of the time, even the knowledge of the physician.
Managed care contracts frequently allow payers to sell or rent their rights to negotiated discounts to third parties. These third parties may be other payers—or they may be nonpayers that do not sponsor or administer health benefit plans but instead collect information about negotiated physician discounts. These rental networks, repricers or brokers then sell the information to health plans with which the physician may or may not be participating. When the physician submits a claim to the health plan, the rental network will reduce the claim payment by the largest contractual discount to which the physician has agreed and to which the rental network has access.
A number of states including Connecticut, Colorado, Florida, Indiana, Ohio, Arkansas, California, Kentucky, Louisiana, Maryland, Minnesota, North Carolina, Oklahoma, South Carolina, Texas and Virginia have enacted laws that limit or prohibit silent PPOs or have adopted some form of the National Conference of Insurance Legislators’ Model Act to Regulate the Secondary Market in Physician Discounts. Although these laws require transparency and may prevent some of the more egregious practices of rental networks and repricers, non-insurer entities are not subject to the same Insurance Commissioner oversight as are health benefit plans. Whether a given state regulates rental networks or not, it is incumbent upon physicians to protect themselves against the potential loss of revenue from rental networks’ activities by reading payer contracts very carefully before signing.
Deciding to Participate—or Not
Almost every managed care contract contains one or more clauses authorizing the health plan to make the terms of its contract available to its affiliates or other payers. The key is to identify the clauses in question and to make sure that they are reasonable.
Typically, the definitions section of the contract will spell out the parties’ rights regarding extending the discount to other parties. The right to sell the discount to a rental network may appear in a definition of “payer,” “provider,” “affiliate,” “participating physician,” “member” or other terms. Provisions on payment methodologies may also set forth the right.
If the contract does permit the health plan to rent out the discount, Martha Swartz, M.S.S., J.D, in a short article entitled Preferred Provider Contracting: Beware of Rental Networks and Third Party Guarantors, advises that you make sure that your agreement with the PPO:
At a minimum, you should try to prevent the contract from allowing the health plan to sell your information to nonpayer repricers and brokers, who are not subject to your state’s prompt pay laws and other important protections, unless the nonpayers will be subjected to the terms of your contract with the health plan. Be on the lookout for clauses as broad as the following:
"Payer" means an employer, trust fund, insurance carrier, healthcare service plan, trust, nonprofit hospital service plan, a government unit, or any entity which has an obligation to provide medical services or benefits for such services to subscribers, or any other entity that has contracted with MCO to access MCO's provider network.
Moreover, rental networks, as opposed to health plans, often send participation invitations directly to physicians while providing very few details about themselves. It is important to understand whether the entity with which you are entering into a contract is a payer or a company whose sole business is renting medical discount networks. Anesthesia and pain medicine groups should be very cautious when reviewing and signing contracts with the latter. There is little reason to participate with any payer or other entity without a corresponding “steerage” provision that obligates the entity to steer patients to the contracting physicians.
Difficulties in Working with Discount Networks
There are several administrative difficulties with managing the rental networks in your lineup as well such as ensuring your expected payments are equivalent to your allowed amounts. Most practices will not realize that their claims are processed under a rental network arrangement until they receive an Explanation of Benefits (EOB) that may or may not identify the contract that was used to calculate the allowable. This information is needed to being the cumbersome task of systematically associating the particular claim with the right contract to calculate the net collection percentage correctly.
Another challenge occurs when the EOB indicates that it was processed under a particular contract but the payment is not calculated according to that contracted rate. Appealing these rental network claims is perplexing and time consuming as you first have to work with the rental network to re-price the claim and then work with the payer to have them acknowledge the re-pricing and reprocess the claim for the correct rate.
The Future of Rental Network PPOs
Rental networks are coming under increasing scrutiny from both federal and state agencies based on consumer complaints. According to the Federal Trade Commission (FTC),
Some medical discount plans claim to provide big discounts from hundreds of providers for a wide range of services, from doctor visits and dental exams to hospital stays and prescription drugs. But many plans fail to make good on those claims. The FTC and many states have found that although some medical discount plans provide legitimate discounts that benefit their members, many take consumers’ money and offer very little in return.
Patients may be subject to extremely large and unexpected co-pays because they are considered to have gone out of network even though their physician receives only the discounted in-network amount from the rental network.
These rental networks are becoming not so “silent” as the American Medical Association, for one, works to educate physicians on their vicissitudes and makes resources available to assist in contract dispute resolution. At a webinar last week on rental networks, listeners were invited to “report unfair payer practices“ using the health plan complaint form at www.ama-assn.org/go/clickandcomplain.
AETNA ALERT
Under a proposed settlement that Aetna reached last week with organized medicine, Aetna beneficiaries, and other plaintiffs, the insurer would pay out $120 million. The class-action lawsuit was based on the same spurious Ingenix database rates paid to out-of-network providers that gave rise to the earlier United Health Group settlement and to pending class-action litigation against Cigna and WellPoint.
When the tentative settlement receives final approval from the federal District Court in New Jersey, we will provide you with further information.
Everyone involved in the healthcare industry will inevitably learn about the confusing aspects of medical health insurance. Just when you thought you had a grasp on the insurance marketplace another complexity presents itself. Sometimes what you might have thought of as an insurance plan turns out not to be insurance at all.
There is a variety of well-known insurance plans available in the market today. Some of these plans are government-run, starting with Medicare and Medicaid. Others are private or commercial managed care plans offered by entities that include Blue Cross and Blue Shield, United Healthcare or Aetna. Then there is a less well known group of companies that market themselves as health benefit plans but that are in reality simply claims repricers, or discount brokers and vendors, i.e., “rental networks” or ”silent PPOs.”
What is a “Rental Network PPO?”
A rental network preferred provider organization or medical discount network or silent PPO or repricer is not an insurance company; nor does it actually pay for any of the patient’s medical bills. Rather, it charges a fee to non-contracted third party payers and others to access the physician’s contracted rates without direct authorization or, much of the time, even the knowledge of the physician.
Managed care contracts frequently allow payers to sell or rent their rights to negotiated discounts to third parties. These third parties may be other payers—or they may be nonpayers that do not sponsor or administer health benefit plans but instead collect information about negotiated physician discounts. These rental networks, repricers or brokers then sell the information to health plans with which the physician may or may not be participating. When the physician submits a claim to the health plan, the rental network will reduce the claim payment by the largest contractual discount to which the physician has agreed and to which the rental network has access.
A number of states including Connecticut, Colorado, Florida, Indiana, Ohio, Arkansas, California, Kentucky, Louisiana, Maryland, Minnesota, North Carolina, Oklahoma, South Carolina, Texas and Virginia have enacted laws that limit or prohibit silent PPOs or have adopted some form of the National Conference of Insurance Legislators’ Model Act to Regulate the Secondary Market in Physician Discounts. Although these laws require transparency and may prevent some of the more egregious practices of rental networks and repricers, non-insurer entities are not subject to the same Insurance Commissioner oversight as are health benefit plans. Whether a given state regulates rental networks or not, it is incumbent upon physicians to protect themselves against the potential loss of revenue from rental networks’ activities by reading payer contracts very carefully before signing.
Deciding to Participate—or Not
Almost every managed care contract contains one or more clauses authorizing the health plan to make the terms of its contract available to its affiliates or other payers. The key is to identify the clauses in question and to make sure that they are reasonable.
Typically, the definitions section of the contract will spell out the parties’ rights regarding extending the discount to other parties. The right to sell the discount to a rental network may appear in a definition of “payer,” “provider,” “affiliate,” “participating physician,” “member” or other terms. Provisions on payment methodologies may also set forth the right.
If the contract does permit the health plan to rent out the discount, Martha Swartz, M.S.S., J.D, in a short article entitled Preferred Provider Contracting: Beware of Rental Networks and Third Party Guarantors, advises that you make sure that your agreement with the PPO:
- makes it clear that the discount you’re offering the PPO is in exchange for the PPO requiring the Payers with which it contracts to steer patients to you as an “in network” participating provider
- obligates the PPO to require all Payers to identify you in all of their written material as an “in network” provider
- makes it clear that the payment terms that you agree to in the PPO agreement are confidential and may not be disclosed without your express written consent, except to a list of Payers that you have approved
- obligates the PPO to provide you with a list of all Payers, updated throughout the term of the contract
- obligates the PPO to refrain from contracting with any entities with which you have an existing agreement that provides higher payment rates
- requires the PPO to contractually obligate all of its Payers to comply with the terms of the PPO’s agreement with you, including payment procedures, UR procedures, underpayment recoupment, etc.
- obligates Payers to note on their EOBs the source of their discounts
- clarifies which UR procedures applies to your contract, i.e. those of the intermediary or those of the Payer
- obligates the PPO to conduct financial due diligence regarding the Payers to which it makes your discounts available to you to reduce the chances that a Payer will fail to make timely and accurate payments
- obligates the PPO to advocate on your behalf if a Payer fails to make timely and accurate payments
- requires Payers to pay your full charges if they fail to pay you within the agreed upon time limit
- permits you to discontinue discounts to, and to terminate your relationship with, any Payer or any Payer’s product if the Payer fails to make timely and accurate payments.
At a minimum, you should try to prevent the contract from allowing the health plan to sell your information to nonpayer repricers and brokers, who are not subject to your state’s prompt pay laws and other important protections, unless the nonpayers will be subjected to the terms of your contract with the health plan. Be on the lookout for clauses as broad as the following:
"Payer" means an employer, trust fund, insurance carrier, healthcare service plan, trust, nonprofit hospital service plan, a government unit, or any entity which has an obligation to provide medical services or benefits for such services to subscribers, or any other entity that has contracted with MCO to access MCO's provider network.
Moreover, rental networks, as opposed to health plans, often send participation invitations directly to physicians while providing very few details about themselves. It is important to understand whether the entity with which you are entering into a contract is a payer or a company whose sole business is renting medical discount networks. Anesthesia and pain medicine groups should be very cautious when reviewing and signing contracts with the latter. There is little reason to participate with any payer or other entity without a corresponding “steerage” provision that obligates the entity to steer patients to the contracting physicians.
Difficulties in Working with Discount Networks
There are several administrative difficulties with managing the rental networks in your lineup as well such as ensuring your expected payments are equivalent to your allowed amounts. Most practices will not realize that their claims are processed under a rental network arrangement until they receive an Explanation of Benefits (EOB) that may or may not identify the contract that was used to calculate the allowable. This information is needed to being the cumbersome task of systematically associating the particular claim with the right contract to calculate the net collection percentage correctly.
Another challenge occurs when the EOB indicates that it was processed under a particular contract but the payment is not calculated according to that contracted rate. Appealing these rental network claims is perplexing and time consuming as you first have to work with the rental network to re-price the claim and then work with the payer to have them acknowledge the re-pricing and reprocess the claim for the correct rate.
The Future of Rental Network PPOs
Rental networks are coming under increasing scrutiny from both federal and state agencies based on consumer complaints. According to the Federal Trade Commission (FTC),
Some medical discount plans claim to provide big discounts from hundreds of providers for a wide range of services, from doctor visits and dental exams to hospital stays and prescription drugs. But many plans fail to make good on those claims. The FTC and many states have found that although some medical discount plans provide legitimate discounts that benefit their members, many take consumers’ money and offer very little in return.
Patients may be subject to extremely large and unexpected co-pays because they are considered to have gone out of network even though their physician receives only the discounted in-network amount from the rental network.
These rental networks are becoming not so “silent” as the American Medical Association, for one, works to educate physicians on their vicissitudes and makes resources available to assist in contract dispute resolution. At a webinar last week on rental networks, listeners were invited to “report unfair payer practices“ using the health plan complaint form at www.ama-assn.org/go/clickandcomplain.