OPINION

Silent PPOs: Physicians need to know who holds their contracts

State legislators and regulators must ensure that physicians know if their contracts are being re-priced.

Editorial. Oct. 3, 2005.

In many financial markets, there exists what's known as a secondary market -- a place where investors buy from other investors.

You might be familiar with this concept if the bank that financed your mortgage notified you that it had sold your loan to a entity specializing in buying, rather than issuing, mortgages. Trading stocks not issued in an initial public offering -- meaning, most every share of stock -- fits the definition of a secondary market, as well.

The reasons for taking part in a secondary market might vary. It could be a straight bid for a big return or a hedge against volatility, but the rules by which these markets run generally demand transparency. Everyone knows the buyer, the seller and, of course, exactly what's being sold.

Not so with one of the hottest secondary markets going these days -- physician contracts.

In the last few years, physicians are reporting a boom in what are called leased or rental networks, perhaps more familiar by their derogatory moniker, silent PPOs. Essentially, physicians are finding that their health plan contracts -- and, especially, reimbursement rates -- are being put out on the market. Insurers are trading those contracts with one another, based on obscure language in the deals requiring physicians to accept terms proffered by the plan and any of its "affiliates."

The physicians didn't sign onto these deals, but they're in them anyway and, as a result, are finding themselves paid as much as 40% or 50% less than they expected.

[...]

Full text of AMNews content is available to AMA members and paid subscribers.

Access details

Join the AMA