on what constitutes a covered service. Interplan / Accountable Health / case, you may automatically revert to
As such, a payer should not be pushed HealthSmart a very low percentage of charges.
away from its rights to pay in accor- Coalition of America / MedAvant
dance to its policy. Cofinity (Sloans Lake / PPOM) It is no surprise then that prior to the
Venturenet (Arizona Foundation / recession, hospital profit margins were
Appropriately, a provider's usual and California Foundation / First Choice at their highest level since 1997.
16
customary (“U&C”) rates are formu- / Healthcare Direct/ Universal
lated to ensure their ongoing sustain- Healthcare / Nevada Preferred) Unintended Consequences for
ability and profitability. Providers providers of squeezing PPO con-
must factor governmental programs, Unfortunately, payers are now joining tracts: By reducing the value portions
per diem arrangements, PPO/HMO PPOs and are (at times) being penal- of PPO contracts, providers are push-
contracts, rising costs, new technolo- ized by paying some of the highest ing the market to other and typically
gy, and bad debt. Most provider pay- rates in the market. This is seen as larger payer groups who, by leveraging
ments are fixed payments, and so only acceptable their size, pay less. As such, the
a small percentage of their claims are provider community has an incentive
paid though charge-based contracts. One benefit consultant suggested to keep some level of competition in
Correspondingly, they must increase that instead of being called “man- the PPO market, and they are faced
their charges significantly in order to aged care companies,” most organi- with the decision of taking short-term
capitalize on their small percentage of zations offering PPO options should gains or insuring long-term yields from
charge-based contracts, and make up be characterized as “discount man- PPO payers. They have also created a
for the limited profitability of their agement firms.”
14
terrible situation for the uninsured that
other payer mix. are left to face egregious bills.
One TPA executive noted that “the Interestingly, we are starting to see
Charges have less and less meaning PPO is retail now. Anyone who isn't providers offer flat discounts (e.g. 25%)
each year. Policymakers need to in a PPO is Paying above retail.”
15
for anyone that is uninsured regardless
realize the chargemaster does not of income. Many plans may want to
mean as much as it used to - we are In many instances the higher the verify if they have exclusions for
getting only 10 to 15 cents for each billed charges, the worse a payer's expenses that would not be charged in
dollar we increase our charges. PPO deal becomes. If one has a per the absence of insurance, as these
Focusing on managed care con- diem arrangement in place, once the kinds of discounts may be of interest.
tracts is far more important to us charges hit a pre-established dollar
than charge master adjustments.
12
threshold or “cap”, then your discount So now what? In our experience, and
reverts to a fixed percentage off subject to the particular circum-
Our key goal with the charge mas- charges. If your claim is a trauma
(see page 12)
ter is to help the hospital meet its
profitability and cash flow needs.
We try to take advantage of those
payers on a percent of charge
arrangement, so we capture all the
revenue codes.
13
PPO Value? The value of most PPO
contracts has undoubtedly dwindled.
At Global Excel, we routinely see out-
of-network negotiations exceeding
most in-network arrangements. The
above referenced factors have all con-
tributed to the commoditization of the
PPO industry. This in turn has lead to
numerous PPO mergers and buy-outs.
The following is a brief list:
Midlands Choice / Midwest Select
Coventry / First Health / CCN
Multiplan / PHCS / VIANT
Concentra / Beech / PPO Next
CIRCLE #1 ON READER SERVICE CARD
The Self-Insurer
©
/ January 2010 • 11
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32