Connecticut puts restrictions on silent PPOs

Connecticut lawmakers have followed others in a handful of states by adopting limitations on insurers renting access to physician networks, a process also known as silent PPOs.

Organized medicine has lobbied against network rentals, saying the arrangements cost physicians money by extending discounts to companies that never negotiated them, but instead paid the negotiating company for access to a physician network.

The bill, passed in May, requires insurers to state formally their intention to sell or rent access to network discounts when contracting with doctors. Insurers also must maintain a list of all secondary parties to whom it sells or rents the network.

The measure requires secondary entities to pay in accordance with the primary contract and terminates the secondary company's access to discounts if the primary contract is canceled. It also requires remittance notices to state clearly who is responsible for paying a bill.

Staff with the Connecticut State Medical Society were surprised at the bill's passage this session, the first in which it was introduced, said Ken Ferrucci, CSMS government affairs director.

"You always hear the saying that it take three years to pass legislation," he said. "We were thinking this was a year we were going to do education around the issue, but because we were so well coordinated and with assistance from the AMA, we were able to clearly define the issue with the Senate and House leaders, and they took hold of it."

AMA staff testified before the Connecticut Legislature in support of the bill. It also had the support of what Ferrucci termed the "legitimate health insurance industry," including the Connecticut Assn. of Health Plans.

WellPoint-owned Anthem Blue Cross and Blue Shield of Connecticut was among the individual plans also supporting the measure, calling it an appropriate balance of "physicians' interests with network market realities."

Ferrucci said Gov. M. Jodi Rell is expected to sign the bill into law. The new rules would become effective on Jan 1, 2009.

Other states have barred health plans from selling their network discounts without telling physicians. Most recently, Ohio's "Healthcare Simplification Act" included provisions that limit silent PPOs, requiring clear disclosures in a contract where a health plan wants to sell its network to another company.

Arkansas, California, Kentucky, North Carolina, Oklahoma, Texas and Virginia are among the other states that limit or prohibit silent PPOs.

Legislators in Connecticut also passed a bill regulating medical discount plans, closing a loophole that allowed third-party marketing companies to get around rules outlawing advertising the plans as insurance. Ferrucci said the bill had not yet reached the governor's desk.