In legislation backed by the Tennessee Medical Association (TMA), the Tennessee legislature has enacted new laws to regulate silent PPO's effective January 1, 2008.  The silent PPO problem is more prevalent in workers' compensation than in any other area, thereby threatening physician participation in the workers' compensation system, according to the TMA.

A silent PPO is created when insurance companies sell or lease their physician networks, along with the network's discounted rates, to various health plan payers, and the buying is done without the knowledge of the physicians in the network. According to the American Medical Association, this secondary discount market drives up the cost of healthcare at the expense of doctors and patients.

The Tennessee legislation requires that any fees paid for medical services furnished on or after January 1, 2008, that are lower than the fees provided in the comprehensive medical fee schedule be made pursuant only to a contract between the health care provider and the employer, trust, pool, or insurer.

The Tennessee legislation imposes various requirements, applicable upon entering or renewing a provider contract, on every contracting agent that sells, leases, assigns, transfers, or conveys its list of contracted healthcare providers and their contracted reimbursement rates. It defines "contracting agent" as any person who is in direct privity of contract with a medical provider to reimburse the medical provider for medical services provided to an injured worker at rates other than those provided under the medical fee schedule. Contracting agents must do all of the following:

(1) Disclose to the provider whether the list of contracted providers may be sold, leased, transferred, or conveyed to other payors or agents including workers' compensation insurers or self insureds;
(2) Disclose whether payors to which the list of contracted providers may be sold, leased, transferred, or conveyed may be permitted to pay a provider's contracted rate if less than the workers' compensation fee schedule;
(3) Allow providers, upon the initial signing or renewal of a provider contract, to decline to participate in networks solely to serve workers' compensation payors that are sold, leased, transferred, or conveyed to workers' compensation payors; and
(4) Maintain a Web page that contains a complete listing of customers to whom the network is sold, leased, transferred or conveyed that is accessible to all contracted providers and updated at least twice a year and maintain a toll-free telephone number accessible to all contracted providers whereby providers may access workers compensation payor summary information and a list of lessees of the network.

The following requirements for workers' compensation payors are also effective beginning on January 1, 2008:

(1) The workers' compensation payor's explanation of benefits or explanation of review must identify the name of the network that has a written agreement signed by the provider whereby the workers' compensation payor is entitled, directly or indirectly to pay a preferred rate for the services rendered; and
(2) A workers' compensation payor must demonstrate that it is entitled to pay a contracted rate within 30 business days of receipt of a written request from a provider who has received a claim payment from the workers' compensation payor. The provider must include in the request a statement explaining why the payment is not at the correct contracted rate for the services provided. The failure of the provider to include a statement will relieve the workers' compensation payor from the responsibility of demonstrating that it was entitled to pay the disputed contracted rate. A workers' compensation payor will be deemed to have demonstrated that it is entitled to pay a contracted rate if it identifies the contracting agent who has contracted with the medical provider to pay the reimbursement at the contracted rate.

To read the Tennessee legislation, go to http://www.legislature.state.tn.us/bills/currentga/asp/WebBillInfo/BillCompanionInfo.aspx?billnumber=SB0445

For further discussion of the "secret world of silent PPO's", see http://www.memag.com/memag/article/articleDetail.jsp?id=283059&pageID=1