Phillips & Garcia, LLP - Provider's Guide to Silent PPOs

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Nine Important Terms to Include in Your PPO Contract to Prevent “Silent PPOs” From Taking Your Money

Term #1: Start Off On the Right Foot. In the beginning recital section of your contract with the PPO, state that the basis for the contract is to give discounts to payors with preferred provider plans or policies that have in-network and out-of-network differentials designed to increase patient volume. If your contract’s legal language is vague or uncertain from the start, you leave yourself open to the claim that the PPO did its best.

Term #2: The Defined Terms in the Contract Make or Break You. Don’t just breeze through the section of the contract entitled Definitions. If you do, you may be doomed from the start. Read every definition and make sure it is restrictive to your intent to give discounts only to payors who have preferred provider plans or policies. For example, the word “Payor” should not be left to include every possible payor under the sun. If you do that, you may as well open up your wallet and start handing out money to every insurer in the country.

Term #3: Steerage, Steerage, Steerage and More Steerage. If your intent is to increase patient volume, then state the mechanisms you require each payor to have to increase patient volume. At a minimum, proper payors should only be those payors who offer PPO policies and plans to members with in-network and out-of-network financial differentials that are significant. Why else would you give such a steep discount? You also need to require that provider directories and PPO ID cards be distributed to members at the point of purchase.

Term #4: Make Them Forfeit Your Discounts. Provide a clause in the contract that allows for forfeiture of all discounts that do not comply with the preferred provider agreement.

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Term #5: Obligate the PPO to Bind All Payors to the Terms of the PPO Agreement. PPOs are notorious for catering to payors and selling out providers. Put a clause in the contract obligating the PPO to bind the payors to the terms and conditions of the PPO agreement. This makes sure that the PPO passes all the restrictions onto its payors, giving you some assurance that the PPO will have your best interests in mind.

Term #6: Know Your Enemy. Insist that the PPO give you a complete and current list of all of the PPO’s payors before you sign the contract. Also, insist that the PPO disclose whether the payors have PPO plans or policies with in-network and out-of-network differentials. If you really want to be diligent, demand a plan summary for each payor.

Term #7: Retain the Right to Audit the PPO’s Files. What’s good for them is good for you. Include a clause that allows you to audit the PPO to ensure that they are complying with the terms and conditions of the PPO contract.

Term #8: Restrict the Sale of Your Discounts. Too many PPOs shoot first and ask questions later. Make sure that you include a clause that restricts the sale, access or disclosure of your proprietary discount information to the payors you specify in the definition section. Also, include a clause that forbids the PPO from disclosing your discounts until the payor offers or has agreed to offer a PPO plan or policy that complies with the agreement. Don’t give the PPO the argument, “I gave them the discounts and it was up to them to steer you patients.”That is a good way to see money go out the door and fast.

Term #9: Protect Your Position in the Marketplace. Your Discounts are confidential, proprietary information. Protect your position in the healthcare marketplace by exercising dominion over your discounts. Draft a tight contract clause indicating that all discounts are confidential, proprietary information.

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