Provider/Rental Network Contract
Read your contracts: Is your practice losing revenue through rental Preferred Provider Networks (PPN)?
Are payers renting your lowest contracted payment rate without your knowledge? Multiple payers could be taking advantage of your lowest contracted payment rate (i.e., most highly discounted rate) through the use of an unknown rental PPN. What is more surprising, however, is that many physicians do not realize how easily and often this occurs. It is possible for a physician to sign a contract with a single rental PPN, which in turn may allow multiple payers, and even other networks, to access this physician’s contracted discount. When this occurs, the payer may either:
- pay the in-network physician at a lower payment rate than the direct contractual agreement between the payer and the physician permits; or
- pay the out-of-network physician at a discounted rate when there is no contract between the payer and the physician and therefore, no agreed upon discount.
Either way the physician practice loses revenue as a result of the unfair business practice.
Physicians are regularly solicited to participate in PPNs. But how do you know if the PPN agreement is beneficial for your practice and if disclosure of the agreement’s use by each payer is required? In today’s market of rental networks, understanding who you are contracting with and what the agreement should contain is imperative.
Access "Read your contracts: Is your practice losing money through rental network PPOs?" to learn more.
Learn what a PPN should include in the agreement, what kinds of questions you should ask, and how to determine whether signing is in the best interest of your practice. The AMA and the American Association of Preferred Provider Organizations (AAPPO) have created an educational toolkit for physicians and PPNs. The guide includes information on the following topics:
- identifying information that PPNs and payers should include in participating provider agreements and additional documents and communications that physicians need to support the contracting process
- understanding key differences in the types of networks and the implications for PPNs, payers and physicians
- identifying information that physicians should know prior to executing a participating provider agreement with a PPN or payer
- defining a "silent PPO"
Take the example of a patient who has a 20% coinsurance responsibility under her preferred provider organization (PPO) benefit plan agreement, with the PPO bearing 80% responsibility of a contracted rate for a provided service. The negotiated contracted rate between the PPO plan and the physician is $100 for a service (which is already a substantial savings from the physician’s retail billed charges), reflecting a contractually-agreed discount. However, the PPO plan uses discount information that it purchases from a rental network PPO which reflects an $80 rate agreed to by the physician under a different contract, and which does not apply to this patient’s PPO plan.
The patient’s PPO pays the physician the $64 (which is 80% of $80), generally without indicating on an EOB/ERA the basis for the discount, and shares a portion of the $16 savings with the rental network PPO. Very little, if any of the $16 is passed on to either the payer (e.g. the employer) or the patient. In fact, without even knowing that the PPO was going to further discount the physician’s billed charges, the patient paid the physician her $20 copay at the time of the visit, in accordance with her contract terms.
In the end of this transaction, not only has the physician lost $16, but the patient’s $20 copay reflects a greater cost-sharing (24%) of the ultimate amount paid to the physician by the PPO—reflecting a 25% increase in the patient’s cost sharing.
Neither the physician nor the patient has any information regarding how the PPO’s obligation went from $80 to $64, and the physician has no basis for determining the extent of the patient’s obligation, other than basing it on the agreement that it has with the original PPO.
The Connecticut State Medical Society (CSMS) and the AMA worked with MultiPlan to create an information bulletin, "MultiPlan Recredentialing Activities," to answer physicians’ questions regarding MultiPlan’s credentialing and recredentialing process and to address concerns regarding physician affiliation with MultiPlan.
In response to multiple inquiries from Federation members, the AMA met with representatives from MultiPlan regarding its problematic Expedited Fee Negotiation Agreements, which promise a quicker payment in exchange for a reduced price. These agreements were unclear to physician practices, did not offer opt-out options, and vaguely implied an ongoing contractual relationship between the physician and MultiPlan which did not exist.
In response to this meeting, MultiPlan provided Frequently Asked Questions about MultiPlan Expedited Fee Negotiation Agreements. The meeting also led to the creation of revised agreements which state that a payment reduction is only made once, and that the agreement does not reflect a contract between the physician and MultiPlan for future services.
Contact your state medical association for specific laws in your state and to report unfair discounting practices.
National Managed Care Contract (NMCC)
Use the NMCC Database to research state laws on rental networks.
Developed by the AMA and state medical association attorneys with expertise in managed care contracting issues and regulations, the National Managed Care Contract includes more than 70 pages of model provisions based on state law and is supported by hundreds of legal citations. The National Managed Care Contract Database also contains an Issue Brief that discusses how to identify and analyze rental network provisions in managed care contracts.
If you believe a PPN is not complying with applicable regulations, you can easily register a complaint. The AMA has created an interactive map that provides each of the avenues through which you can submit a payer complaint in your state—through your state insurance commissioner, your state medical association or the AMA.
Learn more about the AMA’s work to regulate the rental network industry.