Why Some Hospitals Charge Three Times More Than Others

This is a good article about hospital costs – http://www.oregonlive.com/health/index.ssf/2010/10/post_38.html

Editor’s Note: We recently did a study of hospital costs in East Texas for a client located near the Louisiana border. Employees could access two hospitals in town – one was out-of-network and the other in-network. A review of hospital charges from each hospital showed the average cost of the in-network hospital on average was 300-400% higher than the out-of-network hospital. Physicians in the area generally had admitting privaleges at each hospital. The in-network hospital utilization for the prior year cost the client’s self-funded group medical plan in excess of $2 million over what would have been the cost at the out-of-network hospital.

Which Controls – Plan Document or PPO Contract?

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Negotiating PPO agreements and stop loss contracts consistent with the Summary Plan Description is a significant undertaking in today’s current marketplace.  TPA’s are typically obligated to honor the PPO agreement and reimburse providers for unreasonable charges, posing reoccurring issues of wasting valuable assets for TPA’s and their plans.
 
Please join us on October 28th at 1 PM EST as we discuss PPO Conflict Resolution Techniques including:
 
Proactive Strategies,  Implementing Authority, Defending Plan Rights, Drafting Tips
Register now at www.phiagroup.com  

 Editor’s Note: ERISA mandates that a Plan Fiduciary pay only fair and reasonable rates. A Plan Fiduciary must practice due dilligence in assessing what is fair and reasonable to protect the assests of the Plan. Since Plan Sponsors are only third party beneficiaries of PPO contracts, and have little or no knowledge as to the terms and rates agreed between the PPO network and their participating providers, is the Plan Sponsor/Fiduciary acting in a prudent business fashion as required by Federal Law? Probably not.