Molly Mulebriar Exposes PPO Kickback Scheme

Do the PPO Kickback Scheme described in this July 2011 blog posting still exist…………..?

Molly Mulebriar, forensic auditor and ace investigative reporterette from Waring, Texas, obtains  actual PPO contract that confirms that  consumers do not always fully benefit from PPO “discounts.”

Are 100% of PPO discounts passed on to the consumer? In this case, the answer is no according to Mulebriar.

–  A Molly Mulebriar Report –

Bill,  below is the wording in the PPO contact we discussed.  If all the employers nationwide really understood how corrupt PPO’s are we would  have a revolt.   This TPA is throwing out $8 admin fees on 150 life groups, yet they could be making $200 PEPM on the discount differential model below.

It is amazing that we pulled several quotes from XYZ Insurance Company and other national carriers from 1999 to 2003.  The average admin fee was around $50.  Now they are coming in around $30 and below.  Looking at the financials of these carriers their expenses have gone up just like all other companies nationwide, yet their admin fees have almost gone down 50%.   Are employers really that gullible?  I guess so.

Actual wording in PPO contract:

“In addition, Client hereby acknowledges that, as a part of PPOs contractual arrangement with certain participating network providers, PPO and its Affiliates may receive compensation for administrative services performed for the benefit of Participating Providers during the term of this Agreement. Such fees may be in the form of direct payment by the Participating Provider to the PPO or in the form of a differential in reimbursement amounts (the “Differential Model”).

In a Differential Model scenario, the reimbursement amount paid for a claim under this Agreement may not be identical to the amount of compensation a Participating Provider receives or retains in connection with providing health are services.

Client acknowledges, subject to the requirements of applicable law, that reimbursement amounts paid to Participating Providers under this Agreement may not be identical to the amount of compensation a Participating Provider receives or retains. Solely PPO and Participating Provider establish the applicable reimbursement amount in the Differential Model, and the compensation which PPO and Affiliates shall be paid, which shall be fair market value for services rendered.

Neither Client nor any Customer of Client shall be entitled to any portion of such administrative fees paid by a Participating Provider.”

Editor’s Note: An innovative TPA could compete for business with a $3 monthly PEPM administration fee easily using this methodology. Since the TPA’s share of the PPO discount never shows up on the fixed cost side of the ledger but is hidden in the claim cost side, an unsuspecting Plan Sponsor would believe that the TPA was really competitive.  Yet, in reality, the TPA would be making a killing.