PPO contracts can hide traps; scrutinize before you sign

Contract Language. By Steven M. Harris, AMNews contributor. Sept. 1, 2003.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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This column is the first of two that will identify traps to avoid when negotiating your preferred provider organization contracts.

Remember that any PPO contract you are asked to sign can be modified from its original terms and provisions as long as all parties agree, and the applicable revisions are specifically drafted into the contract.

In part one, this column will explore "silent PPO," "all-products," "most-favored nation," and general PPO contract provisions.

Next month's column will address additional PPO contract pitfalls related to prompt-pay provisions, payment methods and risk-sharing.

A "silent PPO" comes into play when a managed care organization "sells" or "rents" its PPO provider network to another party, usually a third-party administrator, insurance broker or smaller PPO. The third party takes advantage of whatever discount the MCO has negotiated with the physician.

The physician only (if at all) becomes aware that a "silent PPO" is in play after he or she has provided services to a patient who is not covered by the PPO.

When the physician files a claim, the reimbursement is less than full payment and the explanation of benefits references the discount with the original PPO, despite the fact that the patient does not qualify for the negotiated discount.

You should carefully review all your EOBs in order to identify this discount. A "silent PPO" may constitute a breach of contract by the payer.