Archive for October 9th, 2010

PPO Sales Rep. Verifies PPO Kickback Scheme (cont.)

Saturday, October 9th, 2010

Some of you have read this redacted email – PPO Rebates – in the previous posting below and have hypothesized that the end result in comparing PPO discounts versus what is actually paid to a participating provider is exactly the same. That is, no matter what the purported discount is, whether it be 48% or 50%, the hospital gets the same payment regardless.

Here is how that would work: If the hospital needs $100 from PPO “A” but has to pay a 4% kickback, and $100 from PPO “B” with no kickback requirement;

PPO “A” – Billed Charge $200……………$4 Kickback to PPO………….$100 Payment to Hospital     48% PPO Discount  

PPO “B” – Billed Charges $200………….$0 Kickback to PPO………….$100 Payment to Hospital     50% PPO Discount   

This is assuming that the hospital bills all payers the same, which of course they do not do (hospitals will argue this point, but the fact is they use different modifying codes against their Chargemaster for different payers).

Here is another scenario:

PPO “A” – Billed Charge $215……….$4 KickBack to PPO…………$100 Payment to Hospital ……….52% PPO Discount   

PPO “B” – Billed Charge $200………..$0 Kickback to PPO…………$100 Payment to Hospital………..50% PPO Discount

In this example, PPO “A” with the better discount pays the hospital the same as PPO “B” but the consumer pays more.

Editor’s Note: Discounts mean nothing.