Silent PPOs, 3rd Party Negotiating Companies, and Repricing Software

Silent PPOs, 3rd Party Negotiating Companies, and Repricing Software

Posted on: February 7th, 2017 by claimsworks

Silent PPOs, 3rd Party Negotiating Companies, and Repricing Software, and how you can to stop them in their tracks and recover what you are owed

By Maggie Caudell, Managing Director of ClaimsWorks, Inc.

Increasingly, healthcare insurance carriers are resorting to sneaky measures to save money on their bottom line. Unfortunately, some of the measures being taken are underhanded, to say the least. Allow me to introduce to you the little-known workings of “silent PPOs”. In a nutshell insurance carriers are using creative means to get around having to pay the out-of-network rates they have promised in their policies. They have resorted to commissioning 3rd party companies to avoid paying the full amount that is owed.

3rd party companies establish contracts with many different insurance carriers – some with in-network rates, but not all (that is not all officially). Once a facility/provider is linked to a 3rd party company through any insurance carrier, whether in-network or out-of-network, that facility/provider will be in the 3rd party company’s databanks.

The following is the chain of events as they play out with “silent PPOs”:

A provider is credentialed with an insurance carrier as an in-network provider. That insurance carrier then forms a contract with a well-connected 3rd party company.

The same provider decides to provide care to an out-of-network patient insured by a different insurance carrier that the provider is not credentialed with.

Then the provider files a claim with the out-of-network insurance carrier.

It just so happens that this new out-of-network insurance carrier has a contract with the same 3rd party company, as is used by the same (first mentioned) in-network insurance company that the provider is credentialed with (unbeknownst to the provider).

Then the 3rd party company checks its databanks to see if it has any in-network contracts with any other insurance carriers for this particular provider.

As it turns out the 3rd party company finds that it has this same provider in its databanks with an in-network contract with a different insurance carrier (the first mentioned above insurance carrier). Good luck for the 3rd party company and the (supposed to be) out of network insurance carrier! They can “piggy-back” on other existing contracts.

Lastly, the 3rd party company applies the in-network rates (which could be substantially less) to this out-of-network provider’s claim.

The 3rd party company claims it has an in-network contract with the provider, even though the provider never established a contract “directly” with this 3rd party company. Rather, the 3rd party company has a direct contract with the (above first mentioned insurance carrier).

This is how insurance carriers lay claim to in-network rates even for their out-of-network claims Everybody wins – except the provider that is. Very sneaky.

The following is an illustration. It is a little complex and difficult to follow:

The color-coded fictional players are:

  • Valley View Hospital – a hospital that is only credentialed as an in-network facility with a few Insurance carriers but accepts other out-of-network PPO insurance as well.
  • Verifiable Insurance – an insurance carrier who offers PPOs to its members. Verifiable outsources some of its claims processing.
  • Beguiler Insurance – an insurance carrier who offers PPO policies to its members with out-of-network provisions. Beguiler then contracts with a 3rd party company to outsource its claims processing using a loop hole to avoid paying out-of-network rates.
  • Wecheatdoctors Inc. – a 3rd party company who contracts with many insurance carriers to process claims for them and to help insurance companies avoid paying out-of-network rates in full.

First scenario: Valley View Hospital holds an in-network contract with Verifiable Insurance carrier. Unbeknownst to Valley View Hospital, Verifiable contracts with a 3rd party company called Wecheatdoctors Inc. to process some of its claims.

Second scenario: Valley View Hospital is not credentialed with an insurance carrier called Beguiler Insurance and has no contract with Beguiler what-so-ever. A patient – Joe Doe, who has a policy with Beguiler (with out-of-network provisions) comes into Valley View Hospital. Since Joe Doe’s policy has out of network 80/20 provisions, Valley View admits and treats Joe Doe. Valley View Hospital then proceeds to submit its claim to Beguiler, Joe Doe’s insurance company in accordance with Joe Doe’s out-of-network provisions – per his policy.

Expectation: Valley View Hospital expects to receive a payment of $10,000 (80% of the billed amount from Beguiler). They plan to bill the patient for the remaining 20% of the bill.

Secret contract: Beguiler, in an effort to avoid paying out-of-network rates, brokers a contract with Wecheatdoctors – the same above mentioned a 3rd party claims processing company used by Verifiable Insurance (mentioned in the first scenario).

The second scenario plays out: As a result of Wecheatdoctors’ contract with Verifiable’s in-network rates, Wecheatdoctors actually claims to have an in-network contract with Valley View Hospital too. (Remember Verifiable holds a contract with Wecheatdoctors as a 3rd party claims processing company.) Wecheatdoctors already had Valley View Hospital in its databanks as an in-network facility through its contract with Verifiable. Therefore Wecheatdoctors lays claim to in-network rates with Valley View Hospital.

The explanation: Even though Valley View Hospital holds no “direct” contract with any 3rd party company, Wecheatdoctors, takes advantage of the original contract that Wecheatdoctors holds with Verifiable. Wecheatdoctors proceeds to reprice the value of Valley View Hospital’s claim by lowering it to a discounted in-network amount – Verifiable’s in-network rates.

The connection: The in-network rate that was originally contracted between Verifiable and Valley View Hospital is now the determining basis that Wecheatdoctors uses to justify lowering the value of Valley View Hospital’s claim. Wecheatdoctors has just “piggy-backed” on the contract that is held between Verifiable and Wecheatdoctors.

The Surprise: Wecheatdoctors presents its EOB to Valley View Hospital with an “adjusted amount” for payment of only $7,000 – while not explaining that it is laying claim to in-network rates. Very sneaky!

The confusion: The billing department at Valley View Hospital may find it strange that the EOB lists Wecheatdoctors as the payer for Joe Doe’s claim. Never having heard of Wecheatdoctors, they remember that they sent the claim to Beguiler. Valley View Hospital’s bill of $10,000 has been handily lowered to $7,000, even though Valley View Hospital never authorized this adjustment.

This may be legal: Insurance carriers sometimes include vague clauses in their credentialing contracts with facilities/providers that enable them to broker with or outsource to 3rd party companies.

This illustration is a classic example of what is being termed as “silent PPOs” abuse.

Sometimes these kind of discounts can “secretly” be applied to your submitted claims by 3rd party claims processing companies, even though they do not even possess any kind of second hand contract for in-network pricing. They may resort to another approach to pay you less, sometimes dramatically less than in-network rates.

Insurance companies can accomplish the same outcome of acquiring lowered “adjusted amounts” in a few ways, in addition to laying claim to in-network rates. THEY determine how much they will pay you by contracting with negotiator companies or repricing companies, who simply lower the value of your claims by suggesting that the billed amount exceeds “reasonable and customary” rates. Sometimes they will send you a note asking for you to sign to accept payment according to their terms. If you sign, they will claim that the signature constitutes a contract. Unsuspecting staff members can fall prey to this tactic.

The term “repricing software” also may show up unexpectedly on EOBs indicating that liberty was taken to try to pay you less than what you deserve. This “silent PPO” abuse is especially prevalent in the case of workers compensation claims and automobile injury claims. Auto insurance companies and workers compensation companies outsource their claims to be processed by 3rd party companies, because they do not handle medical claims processing themselves. (Some 3rd party companies are entirely legitimate, as in the case of self-insured employers who outsource their claims processing.)

So, if you have been the victim of “silent PPOs” or the like, you should know that you are not helpless to combat them and recover what you are owed. The following is the approach that ClaimsWorks uses to go after 3rd party companies in order to recoup for you what would otherwise be lost revenue.

How we, at ClaimsWorks pursue these 3rd party negotiator or repricing companies sometimes referred to as “silent PPOs” to recover lost revenue —

  1. Using HIPAA compliant policies, we would be calling and corresponding with insurance companies and 3rd party companies, so we would need a list of all of the underpaid claims. The name of the patient, DOB, patient’s address, DOS, corresponding insurance company, insurance member # (preferably a copy of the front and back of the insurance card).
  1. We would need your NPI number and tax ID under which the claim is filed.
  1. Then we would need to take a close look at the EOBs. Obviously, if the claim has been dramatically (seemingly arbitrarily) lowered in value in a substantial way, that would be our first clue that we are dealing with a 3rd party company. We would look for certain language. Terms like: “affiliated networks”, “extended networks”, “voluntary PPOs”, “wrap-around PPOs”, or “non-directed PPOs” are indicators. The mention of “repricing software” on the EOB is also an important indicator. We would be looking for unfamiliar company names of PPOs on the EOB that are different from the insurance company listed on the patient’s insurance card.
  1. Sometimes the EOB has an adjusted amount owed, without any clues as to who the 3rd party claim processing company is. We would call the insurance company to get more information, and if it is determined that a 3rd party company is involved. We would then begin the process of demanding full payment. We would request that the payer prove that it is actually entitled to the claimed discount that they are purporting, as in showing us a contract that is held between the facility and the 3rd party company.
  1. The consultation of a state-specific healthcare lawyer may be necessary. A lawyer can help us with established state laws and provide us with the appropriate legalese that will need to be included in our communication and letters that we would be sending to insurance payers and 3rd party companies.
  1. Where this is no evidence of any contract between your facility and the 3rd party company, we would insist that because they have no legal contract with you, they owe you back-payment on all underpaid claims. We would argue that they had no rightful basis for lowering the charges. We would insist that they must pay on all the claims in accordance with the patient’s out-of-network provisions. For example, for an 80/20 policy they should pay 80% of the billed amount as specified in a policy for out-of-network facilities/providers.
  1. If the insurance company insists that they consider their discounted payments to be “reasonable and customary”, then we would ask for a detailed explanation of the basis or evidence that they have used to determine that your charges were somehow excessive. We would ask for documentation of how your charges have been considered excessive by comparison to other facilities. They would need to include as part of that documentation the following: names and addresses of the other facilities on which they have based their charges. (Geographic location can make a big difference here.) They would need to include the age of the data that they are using.
  1. If they did manage to acquire a signature constituting a contract from an unsuspecting staff member at your facility/practice, we would begin the process of terminating those policy-specific contracts. The process can take 30 – 90 days. After which time, the repricing must end. These contracts with PPOs last for only for one year, but some have an “evergreen” clause that makes provision for an automatic renewal – “if they do not hear otherwise from you”. In the event that the 3rd party company produces a legitimate contract of some sort, we would be unable to collect on back pay, but we could stop future abuse.
  1. As a part of the process we would be sending certified letters, and we would be copying in the state insurance commissioner in the process. The state insurance commissioner would certainly be kept appraised of the on-going situation in trying to recover these payments that you are owed.
  1. If you are an out of network facility/practice, you should not have any in-network PPO contracts out there that these 3rd party companies can “piggy-back” onto and lay claim to discounted in-network pricing.
  1. In the end and if necessary, you may need to sue to recover funds using a state-specific healthcare attorney to represent you.

In conclusion, there are effective measures that you can take to put an end to “silent PPO” abuse. So, armed with new understanding and strategy, fight, fight, fight to recover that revenue that belongs to you instead of the greedy hands of insurance companies, who contract with 3rd party companies. Don’t let them keep any of the revenue that you earned and deserve!