SILENT PPOs

1
SILENT PPOs
Texas Department of Insurance
2
What is a PPO?

• PPO is an acronym commonly used to refer to a
  preferred provider organization.
• Many persons and institutions use the term
  differently to refer to a health plan which
  offers preferred provider benefits.

3
For purposes of discussion, a PPO is

• A group of health-care providers (such as
  doctors, hospitals, and pharmacies) that agree to
  provide medical services at a discounted cost to
  covered persons in a given geographic area.
  BLACKS LAW DICTIONARY 1217 (8th ed. 2004)
• A group of health care providers each of whom
  agrees to offer services to a given employer or
  insurer at a lower cost in return for a stable
  volume of patients or other incentives. ROBERT
  W. STRAIN, INSURANCE WORDS AND THEIR MEANINGS 99
  (1987).

4
What is a silent PPO?

• A silent PPO buys, sells, leases or otherwise
  transfers provider discounts without regard for
  steerage of patients to preferred providers.
• These PPOs are also referred to as ghost,
  non-directed, or blind PPOs.

5
How are silent PPOs addressed in the Texas
Insurance Code?

• Preferred Provider Benefit Plan (PPBP)
• TEX. INS. CODE 1301.056 addresses the sale,
  lease or transfer of information regarding the
  payment or reimbursement terms of a preferred
  provider contract, including a contract with a
  preferred provider organization. Chapter 1301
  applies to preferred provider benefit plans.
  (See 1301.001(9).)

6
How are silent PPOs addressed in the Texas
Insurance Code?

• TEX. INS. CODE 1301.004 sets forth the general
  applicability of TEX INS. CODE Chapter 1301
  each preferred provider benefit plan offered
  in this state must comply with this chapter.
• Further, TEX. INS. CODE 1301.002 clarifies that
  Chapter 1301 does not apply to a provision for
  dental care benefits in a health insurance
  policy.

7
How are silent PPOs addressed in the Texas
Insurance Code?

• Preferred Provider Benefit Plans (PPBPs)
• Over which parties does TDI have authority?
• Insurers (TEX. INS. CODE 1301.001(5))
• Third party administrators (TPAs) TEX. INS.
  CODE 4151.001(1))

8
How are silent PPOs addressed in the Texas
Insurance Code?

• Workers Comp Health Care Networks (WC Networks)
• TEX. INS. CODE 1305.1545 sets forth specific
  restrictions on an insurance carriers or third
  party administrators ability to reimburse
  providers on a discounted basis for services that
  are provided to an injured employee. Chapter
  1305 applies to workers compensation health care
  networks.

9
How are silent PPOs addressed in the Texas
Insurance Code?

• WC Networks vs. PPBP
• TEX. INS. CODE 1305.1545 has a much broader
  application than does TEX. INS. CODE 1301.056.
  Chapter 1305 provides standards for the
  certification, administration, evaluation and
  enforcement of the delivery of health care
  services to injured employees by networks
  contracting with or established by carriers.

10
How are silent PPOs addressed in the Texas
Insurance Code?

• WC Networks
• Over which parties does TDI have authority?
• Insurance Carriers (TEX. LAB. CODE
  401.011(27))
• TPAs (TEX. INS. CODE 4151.001(1))

11
How are silent PPOs addressed in the Texas
Insurance Code?

• WC Networks
• Chapter 1305 sets rigorous requirements to ensure
  that a network has the ability to provide
  continuity, accessibility, and quality of
  services and imposes a quality of care
  requirement that each network implement a
  documented process for the selection and
  retention of contracted providers in accordance
  with rules adopted by the commissioner. TEX. INS.
  CODE 1305.301(d)(1), 1305.302(b) and (g), and
  1305.303(h).

12
How are silent PPOs addressed in the Texas
Insurance Code?

• WC Networks
• TDI rule 10.42(b)(14) requires provider
  contracts and subcontracts to include a statement
  that the provider specifically agrees to provide
  treatment for injured employees who obtain
  workers compensation health care services
  through the network that is specifically
  identified in the contract as a contracting
  party. (28 TEX. ADMIN. CODE)

13
How are silent PPOs addressed in the Texas
Insurance Code?

• WC Networks
• Since TDI certifies the WC networks, and as part
  of certification, reviews contracts, the networks
  are subject to a higher level of scrutiny.