TMA Backs Bill to Regulate Silent PPOs

TMA Testimony by Dawn Buckingham, MD

House Insurance Committee
House Bill 620
March 5, 2013

Good afternoon, Chairman Smithee and members of the committee.  My name is Dawn Buckingham and I am an ophthalmologist here in Austin. On behalf of the Texas Medical Association (TMA) and 47,000 physicians and medical students, I would like to thank the chair and committee members for the opportunity to testify in support of Committee Substitute House Bill 620 by Rep. Craig Eiland.  This legislation would put into place a much needed law to regulate companies or networks that sell, lease, or share physician discounts without the physician’s knowledge or consent.

This is the second time I have stood before this committee to testify in support of regulations for this market practice.  I want to thank Representative Eiland for re-filing legislation addressing the prevailing market practices used by currently unregulated rental or secondary networks (e.g. Beech Street, Multiplan, Viant) that sell, resell, or lease physician contract rates — Often without the physician’s authorization and notice from the insurer or network — This activity is referred to as a “silent PPO.” 

A silent PPO occurs when an insurer or third-party-payer accesses a physician’s contract rate through the use of a secondary or rental network.  Often such networks do not have a valid contractual relationship in effect with the physician.  We believe CSHB 620 is an encouraging step in the right direction toward ensuring these networks’ actions are transparent and appropriate.

When we talk with legislators about our discounts being stolen or used without our consent, we are often asked, “How does that happen?”  I am here today to tell you we ask ourselves the same question — Finding the answer is not an easy task.  You have to take an inordinate amount of time to piece it all together so you can challenge the insurer or network using the unauthorized discount. 

The negative impact to patients, including both you and your constituents, is that you end up with misleading information. For instance, often these networks, insurers, and entities list physicians in their directories as participating (in network) and credentialed, when in reality they are not.  The result, the patient is hit with unexpected and unanticipated out-of-pocket costs.

The Tale of the Trail
It is often said “a picture is worth a thousand words.”  Before you is a schematic of the “Tale of the Trail” of my colleague’s discount of two decades ago that United Healthcare ended up using to pay a claim as recently as 2012. Please take a deep breath as we plunge into this. 

For your convenience, in your attachments, you have explanations to support the diagram before you.  This narrative chronologically documents the correspondence and actions that took place since 1993.  This shows how his 1993 discount with Preferred Health Network was transferred without his knowledge or consent and then used to pay a United Healthcare enrollee’s claim in 2012 – 20 years later. 

Now bear in mind, my colleague is a solo practitioner who for a time had contracts with Preferred Health Network, MultiPlan, United Healthcare, and Beech Street.  However, as of 2006, he had terminated all the aforementioned contracts.  From 2006 until 2012, his patients’ claims were paid correctly.  He filed claims as a courtesy for his out-of-network patients and was receiving copies of the explanation of benefits sent from the insurance company.  This is why he was able to identify a discount that was no longer in existence had reappeared and had been inappropriately applied.  Unfortunately, for physicians like me who are part of a group practice, this activity can go unnoticed due to the number of actual legitimate direct contracts in place with these same insurers.

I ask you, would this be acceptable behavior in any other type of business in this state?

Chairman Smithee and members of the committee, thank you again for allowing me to testify today. HB 620 is a necessary first step and solution in identifying these entities, as well as giving them specific disclosure and contracting responsibilities if they desire to be part of the health care market in Texas.

I would be happy to answer any questions. 

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