AMA tool kit guides informed choices on PPO contracts

A new guide to preferred provider organizations is more than an 11-page summation of tips. It's a sign of success in the American Medical Association's long-running effort to convince PPOs that those in their industry who try to hoodwink physicians are doing damage to above-board PPOs as well.

The guide, which the AMA calls the "Physician and other health care provider contracting toolkit," spells out PPOs' responsibilities in providing transparency in contracting. It gives physicians a checklist of what should be in any PPO contract they sign. And it gives them a checklist to assess accurately the value of a PPO to their practices. The guide can be found on the AMA Web site (link).

Physicians also will find an acknowledgment from the industry itself about the fundamental unfairness of silent PPOs -- previously referred to by insurers as "rental networks." A statement issued jointly by the AMA and the American Assn. of Preferred Provider Organizations, which cooperated on the tool kit, makes clear that "any entity that takes a physician or other health care provider discount without the contractual right to do so or without disclosing when a network contract is applied to a claim is a 'silent Preferred Provider Organization.' "

The statement continues: "We believe it is in the best interest of physicians, other health care providers and PPOs to pursue contractual relationships based on fair business practices and principles to ensure a mutually satisfactory business association."

The AMA has spoken out for years on the problem practices of the PPO industry -- such as silent PPOs and other issues related to a lack of contract transparency -- as PPOs became the dominant model for health plans. According to AAPPO, 69% of Americans are enrolled in PPOs.

The AMA has worked with organizations such as the National Conference of Insurance Legislators, to whom the Association first testified about silent PPOs in 2005. For years, the AMA pressed to have NCOIL adopt its model legislation on network rentals. In late 2008, NCOIL approved a model that was supported by the AMA and included input from the organization, as well as AAPPO and America's Health Insurance Plans.

The model legislation, passed in at least six states, doesn't eliminate rental PPO networks. But it does put strictures on them, such as making the third party renting a network abide by the terms of the original contract, and giving physicians a right to deny discounts to insurers who don't follow those rules.

The PPO industry, after hearing from the AMA, realized its members were at risk of losing doctors in their networks -- key to what they're selling to employers and individuals -- if those physicians were reimbursed less than their contracted pay because someone unbeknownst to them was renting their services to another network.

The tool kit helps doctors identify a contract that would risk putting them in such a network, and emphasizes transparency in contracting. It doesn't mean that physicians are necessarily going to like the contract a PPO is offering. But the tool kit should help eliminate confusion.

It also serves as a reminder to PPOs that physicians have the right to know all of what they're getting out of a deal, as well as the ability to walk away from a bad contract.