While once a good idea in terms of managing available medical providers, Preferred Provider Organizations (PPOs) often now cause members more issues than help. The traditional way of managing healthcare via a PPO is outdated and riddled with conflicts of interest, opportunities for fraudulent charges and difficulty for members to navigate.
In order to fix the broken healthcare system, there needs to be a realignment with the needs of a member group, a commitment to total transparency, a reliable process in place for auditing claims and an elimination of any conflicts of interest.
Understanding Preferred Provider Organizations
The current healthcare system relies heavily on a traditional carrier PPO. In a traditional PPO network, the carrier pre-negotiates rates with a network of medical providers they then sell to members. While, in theory, this is convenient for members, it unfortunately creates a significant conflict of interest for providers.
At their core, a traditional PPO carrier is selling a network of doctors to their members. To be competitive, they must have the largest and broadest network available. This means the carriers are constantly in negotiations with medical providers as to what their reimbursement rates will be. If one carrier will offer a provider more money, they’ll be more interested in offering that carrier as their accepted insurance.
Conversely, since a traditional carrier is constantly trying to grow their provider network, they aren’t focusing on keeping claims costs as low as possible for employers and employees in their member groups. Instead, any excessive charges needed to continue offering a higher rate to medical providers gets passed off to the employee member group.
Finally, when an employer group establishes a relationship with a traditional carrier network, they are signing away their audit rates, or the ability to audit the claims made within their benefit plan. The broker instead handles claims, so employers are not able to catch any instances of fraud, waste, duplication or excessive charges.
Understanding Healthcare Conflicts of Interest
The major problem that exists, then, with a PPO network is conflicts of interest. To fix the broken healthcare system, first there must be a removal of all conflicts that do not align with the client, employer group, company or employee needs. Instead, the focus must be on aligning with employees and employers to provide excellent access to medical providers at a fair cost — not growing their own network to make more money off of employee groups.
Common Forms of Fraud in Healthcare
To fix the brokenness of the healthcare system, it’s important to understand common fraudulent practices within the industry. Replacing a PPO network with a transparent, direct relationship between members, healthcare providers and their insurance agency can help stop these problems.
Fraud in Health Care Billing
Health insurance companies must first work with medical providers to make sure that their billing practices are compliant. This means that bills being presented do not have erroneous charges or fraudulent billing practices, like unbundled CPT codes. A CPT code is a code put in place for compliance in medical billing. Sometimes, during the billing process, a medical provider will use multiple different codes as opposed to using one code so they can make more money from a procedure.
The Importance of Auditing Claims
Second, health insurance companies must commit to auditing claims on behalf of their employer groups. Unfortunately, the majority of bills presented by medical providers or third-party billing agencies contain non-compliant billing practices, usually in the form of excessive charges. For the sake of transparency and fair billing, health insurance providers need to promote a direct relationship between patients, medical providers and their broker as opposed to a pre-negotiated contract.
In order to audit a claim, a health insurance company must go back to a medical provider after they submit a bill for payment and ask for a full breakdown of the charges. Then the company must make sure all claims were eligible and make sure there were no unbundled codes used.
Transparency in the Healthcare System
Ultimately, transparency is what’s needed to fix the broken healthcare system. Along with closely examining billing practices, auditing claims and eliminating the pre-negotiated contracts of the PPO model, being able to see and follow where every dollar goes in billing is critical. This means understanding if a carrier negotiated a contract with a medical facility resulting in excessive charges, or if a broker received “kickbacks” in the form of bonuses or overrides.
The point of health insurance shouldn’t be to make brokers excessive money, but to provide affordable, quality healthcare to members. A health insurance company that provides complete transparency reports to their clients what the money they pay goes towards — including all money made by the company themselves.
A Direct Relationship Between You, Your Medical Provider and Your Health Insurance
At ClearChain Health, we believe in transparent health care. Instead of a traditional carrier network, we allow members to choose their provider without network restrictions or limitations. Enjoy better benefits with reduced out-of-pocket costs and employee contributions — contact us to get started today!