Maximizing provider discounts is an essential cost management strategy.  Even with the best primary PPO coverage however, optimization can only be achieved by managing non-network expenses as well.  Notwithstanding, the discussion herein, payers can reduce the cost of out-of-network claims while staying within the law and the parameters of fair business practice if the policies, processes and techniques employed meet these 5 criteria:

1. A legitimate contractual relationship between the provider and the payer must exist, premised on a  bargain for exchange upon which there is a meeting of the minds between parties.
2. There should be no material misrepresentation to the physician as to how a discount is taken.
3. The method must preserve the integrity of the underlying PPO plan design.
4. Provider reimbursements should be arrived at fairly, and not through contentious methods.
5. The mitigation of plan sponsor, plan participant and re-insurer risk associated with discount reversals/denials, litigation and the potential to lose access to providers must be accomplished.

The following is a discussion of out-of-network cost reduction methods within the context noted above.