Are PPO “Discounts” Off Reasonable Fees, or Unreasonable Fees?

PPO discounts save money. But are the discounts applied to reasonable fees, or unreasonable fees? What is a reasonable fee and what is an unreasonable fee? Are usual and customary fees the same as reasonable fees? How do reasonable and customary fees compare to PPO discounted fees?  What is the relationship between provider fees and cost?

Who develops PPO contract fees? Is it the provider in partnership with the PPO or is it the provider in partnership with the payer? If the payer who pays the bills is not a party to the PPO contract, why? After all, the payer pays.

Consultants are relied upon to advise clients. Consultants are experts and are unbiased, at least that is what they tell us. Many employers take the advice of their consultants, and often move their insurance to the company that provides the lowest cost.  Was the move the right move, based on the consultant’s advice?

Employer: How do we know we are doing much better this year than last year?

Consultant: What was this year is last year plus or minus this year’s change.

Editor’s Note: Change is the only constant, so why do we need to measure it? You don’t know if something is better if you didn’t know how to measure what it was before.