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The American Medical Association (AMA) considers silent preferred provider organizations (PPO's) to be fraud, FRAUD, and estimates this activity costs physicians $3 billion BILLION dollars annually. To understand this phenomenon, the difference between conventional and silent PPO's must be understood. A conventional PPO contract is an agreement between a physician and a managed care organization or payor. Physicians benefit from conventional PPO's because for discounting fees based on volume, they are guaranteed a certain number of patients who have a financial incentive to visit in-network physicians. The framework of this agreement begins to erode when the contract allows assignment. Assignment allows the payor to sell, lease, or loan the contract to other networks and payors. These borrowing entities take full advantage of the contracted discounts, but physicians never fully appreciate any increased volume for being in-network. This is a silent PPO -– discounts taken by an indirectly contracted payor.

Many states, including Maryland, Florida, and Texas, have legislatively restricted assignment of contracts. The National Conference of Insurance Legislators (NCOIL) convened in November of 2008 to draft model legislation for states to deal with this growing issue. Tennessee was represented by Sen. Steve Southerland (R) – Morristown and Rep. Charles Curtiss (D) – Sparta. Both men chaired the commerce committee for their respective legislative bodies in the 105th General Assembly. In their draft legislation, NCOIL attempts to legitimize the sale or lease of rental networks by making the system more transparent. In theory, this makes sense; transparency allows physicians to see how a certain network is accessed, and then take corrective action. However, theory doesn't always make good practice. Selling and discounting claims through a silent PPO network three, four, or five times is what concerns physicians most. It is then that claim appeals and errors in reimbursement are often ignored by the final payor, and the physician is somehow responsible for correcting an error with an indirectly contracted entity. NCOIL Vice President Rep. George Keiser (ND) understands this premise; in a NCOIL press release he stated, "If reimbursements cannot be managed effectively, it drives up healthcare costs for everyone."

Tennessee physicians already have experience with reimbursement transparency laws. The state's Our current workers' compensation law mandates that payors identify the leased network on the EOR. Unfortunately, when the reimbursement is incorrect, or an unauthorized discount is taken, it is up to the physician to prove the discrepancy. This often takes multiple phone calls and appeals with no resolution. Often physicians decide to write-off claims in frustration because of the overhead incurred. Even though there are penalties for habitual offenders, the reality is that there is no state agency that has taken ownership of enforcing the current law, and the process is exhausting at best. It is this frustration that is leading many specialty groups to cease providing services for workers' compensation injuries.

During the 105th General Assembly, House Bill 3848 and Senate Bill 3886 were introduced by two East Tennessee legislators. If they had become law, they would have limited contract assignment. HB3848 passed the House Employee Affairs Sub-Committee, and appeared to have the support necessary to pass a full House vote. SB3886 stalled in the Senate Commerce committee. In the eleventh hour, Sen. Jack Johnson (R) - Brentwood, a committee member, suggested an amendment which undermined the impact of the Bill. It became apparent that the original version of SB3886 would not pass the committee, so the Bill was pulled.

What can physicians do?

• Do not agree to contracts that allow assignment.
• If you think you must sign a contract with an assignment clause, amend the contract to penalize any payor that incorrectly reimburses your claims; require payment based on full charges if the claim is not paid correctly after one appeal.
• Become educated on how other states have resolved these issues. For instance, note the language of this statute: Maryland §15-125 (b)(1) "The insurance network may not assign, transfer, or subcontract a provider's contract wholly or partly, without first informing the health care provider and obtaining the health care provider's express written consent; (b)(2) A carrier may not terminate, limit, or otherwise impair the contract of employment of a health care provider with the carrier on the basis that the health care provider refused to agree to an assignment, transfer, or subcontract..."
• Contact your local legislators about business issues. SB3886 and HB3848 were sponsored because of constituent concerns and gained traction because of grass roots efforts across the state.
• Be vocal with your professional organizations. Let them know what you think about their legislative initiatives.

Dan Pohlgeers, MBA, OTR, CHT is the administrator of Trinity Hand Specialists, PLLC, an Orthopaedic Hand Surgery and Therapy Clinic in Johnson City, Tennessee.

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