Texas Silent Ppo Law

Preferred Provider Contracting: Beware Of Rental Networks And ...

By Martha Swartz, M.S.S., J.D.

What is a PPO? As a health care institution or individual provider, it is difficult to provide services in Pennsylvania and New Jersey without participating in at least one preferred provider network (PPO).  PPOs are a form of managed care in which: an intermediary (PPO) forms a network of health care providers and connects the health care providers to third party payers such as insurance companies, employers, and third party administrators (Payers). The providers offer their services to the PPO at a discounted rate because they expect Payers to steer patients to them as a result and thus, to increase their patient volume. The health care providers that are on the PPO’s panel of providers are “in-network” and, because of the negotiated discounts, patients who go to them for services pay less than they pay for similar services offered by health care providers who are not on the PPO panel, or are “out of network”. A PPO can be a “win-win” for patients and health care providers in that individual patients who seek services from in-network providers save money and in-network providers potentially receive increased revenues as the result of increased patient volume which results from the PPO’s marketing of their services as being “in-network” and thus less expensive.

What is a Rental Network? The above arrangement falls apart if the PPO fails to market the health care provider’s services as “in network” or if the PPO makes the discounts available to Payers that are not part of the health care provider’s marketing plan, that is, if the PPO “rents out” the provider’s discount without the provider’s knowledge or consent.  When this happens, health care providers find themselves providing services to individuals for which they expect to receive a certain reimbursement amount, only to find out at time of payment that the individual’s Payer has accessed a discount to which it is not entitled. The PPO may even have made your discount available or “rented out” your discounts to Payers with which you already have a negotiated an agreement at a higher rate. Providers thereby end up with the “short end” of the bargain, that is, they give discounts, but don’t receive a higher volume of patients in return.

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