Experts estimate that providers nationwide have lost between $1-3 billion dollars annually since silent PPOs and PPO network stacking began in the early 1990’s.  Given the enormity of the situation, as indicated below, both payer and provider industry trade groups are opposed to these practices.

·The American Medical Association believes silent PPOs are financially harmful to physicians (and hospitals), that they violate fundamental concepts of fair business dealing, and that they may constitute fraudulent activity.  The AMA believes that any discounts applicable to a PPO enrollee should be disclosed at the time coverage is verified and that the sale or otherwise unauthorized us of contract rate information should be specifically prohibited.

The AMA succeeded in getting silent PPOs banned from all Federal Employee Health Benefits Plan (FEHBP) contracts, which was an important victory in light of the federal government’s liberal use of silent PPOs as a cost savings mechanism in the past.  In a recent landmark court case in which the use of silent PPOs was deemed illegal, the AMA filed a “friend of the court” brief arguing against silent PPOs.  It has distributed a “,Silent PPO Alert Action Kit” containing information and resources that provide practical advice on model contract language, how to identify improper discounts; and how to recover monies owed to providers by payers that take improper discounts.

·The American Association of PPOs believes that silent PPOs are not PPOs by their definition and that using them “appears to be the product of payers taking unfair advantage of the complexity of managing multiple managed care contracts, aggressive interpretation on contracts by discount brokers, poor provider business decisions and possibly fraud.”

The AAPPO does not condone the practice of applying the negotiated fee schedule in situations where the payer/PPO side of the bargain is unfulfilled, e.g., where the payer was not a contracted party prior to the time of service for which payment is sought, and where steerage of the eligible population could not have been a factor in the patient’s selection of a provider.

·The stated position of the Health Insurance Association of America is that it is “totally opposed to silent PPOs.  It would be incorrect and inappropriate for any member of this association to hire a broker to, in a sense, ride on the coattails of an existing agreement to which they were not a party.”

·In an effort to eradicate silent PPOs, the American Accreditation Healthcare Commission (URAC), revised its quality standards for health plans and health networks to prohibit silent PPOs.

·The National Association of Insurance Commissioners’ policy on silent PPOs is that a payer’s fee agreement should specify that the provider accepts the negotiated rates only for defined groups of patients and/or only for patients who are steered to the participating provider through financial incentives or communications from the payer.  The contract should prohibit disclosure or release of payment arrangements to other parties without the provider’s express consent, including the lease of the network to other payers.

·The Association of Managed Healthcare Organizations guidelines state that contracts that do not limit negotiated rates to steered enrollees should say so.  Further, it states that a contract that allows additional payers to use negotiated rates without the provider’s consent should require a previously executed agreement that incorporates the financial incentives and other steering mechanisms of the provider agreement and gives reasonable notice to the provider of the addition of new payers.

·The American Managed Healthcare Organization sees silent PPOs as a breach of contract issue.