Brownsville ISD VS HealthSmart – PPO “Discounts” Key to Case

If large claimants whose claims individually exceeded $100,000 represent 24% to total claims for the group, what effect would that have on PPO “discounts?”

Answer: A significant effect. Overall “discounts” would be lower in the aggregate.

Hospital contracts contain “outliers.” What does that mean? It means that when a claim exceeds a certain pre-set level, the entire claim all the way back to dollar one is discounted by as little as 20% off billed charges. Gone are the better “discounts” such as per diems, global pricing, etc. To our knowledge, there is not one PPO contract currently in place in the Brownsville medical community that has an “outlier” higher than $100,000.

So, if the average PPO “discount” for the group is 62% excluding claims that are subject to the outlier, what effect will 24% of total claims subject to an outlier have on the overall “discount?” Would it be less, or more?

Answer: Less

So, if PPO “discounts” decrease from one year to the next, could it be due to 24% of claims being discounted less? Or could higher costs charged by local health care providers who dont publish their prices, and dont reveal their pricing agreements with PPO networks, cause costs to increase as well? Or a combination of both?

Editor’s Note: Discounts mean nothing.

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