PPO Network Prohibits Audit – Employer Told Must Pay Egregious Bill

Most employers who self-fund their group medical plan utilize a PPO network. This contractual agreement to access “preferred pricing” through participating providers carries certain onerous requirements such as the inability, or limited ability to audit claims.

Plan Fiduciaries have a duty to oversee the assets of the plan and ensure the plan pays fair and reasonable fees. Retaining full audit rights are important. To give that right up, violates the fiduciary’s responsibility under ERISA.

Here is a perfect example of a self-funded employer group who hired an independent outside forensic auditor to review a hospital bill. The audit identified $80,340.75 in overcharges to the plan.  Most of these charges were for services never received by  the patient, or were duplicate charges.

The PPO sent the following letter – PPO Audit – to the employer threatening to terminate the contract and demanding that the self-funded employer immediately remit $80,340.75 to the hospital.

Editor’s Note: This is upside down. Additional “gotchas” in a typical PPO contract include a non-compete clause which prohibits the employer from negotiating directly with providers for two years after termination of the PPO contract.