PPO Organizatons Have Moved to the Side of the Hospitals

The Phia Group and AMPS Comment on CNN Report On Outrageous Hospital Charges

MyHealthGuide Source: AMPS and The Phia Group, 3/9/2010, www.advancedpricing.com and www.phiagroup.com

CNN report: www.cnn.com/video/#/video/health/2010/03/01/cohen.health.care.bills.cnn?hpt=C2

Atlanta, GA — CNN aired a report by reporter Elizabeth Cohen on inappropriate charges by hospitals for various items used for patient care. Among the examples cited were a single toothbrush billed at $1,000 and a single Tylenol caplet billed for $140. The report details how these are not isolated incidents, but rather part of how hospitals regularly bill patients and insurance companies. Mike Dendy of AMPS and Adam Russo of Phia have responded to this report.

“Egregious charges like those described in the CNN report are much less of an anomaly than most payers think,” commented Mike Dendy, President and CEO of Advanced Medical Pricing Solutions. “Our observation is that perhaps the hospital that charged for 41 bags of solution (but only used 1) may be expecting payment in full because the charge was for an in-network service where they had a contract that calls for payment without an external audit,” added Adam Russo, CEO and Founder of Phia.

“This and thousands of other examples we have in our data base provide a clear sign that smaller payers that use rental PPO networks need to consider alternatives to the PPO model and move on to other forms of cost containment,” continued Dendy. Russo stated that, “Many self-funded employee benefit plans have language in their plan documents that specifically allow for claims to be audited and paid on usual, reasonable, and customary terms, but most PPOs do not allow for this to occur. If these benefit plans follow the terms of the plan document, in many cases an audit of itemized charges will violate the terms of the PPO agreement and  our industry needs to do something about this.”

A Wall Street Journal article published on January 30th reported that Hospital Corporation of America (HCA) paid out a $1.75 billion dividend to their investors for 2009 results. The Journal notes the payout to be among the biggest ever.

“For the most part, PPO organizations have moved to the side of the hospitals,” commented Dendy. “PPO organizations are using the contracts that they believe smaller payers must have to force undue payments from employer groups who are unaware of what they are paying for. AMPS’ reviews of hospital billings often show overcharges to be in the 18-20% range on well over 90% of the bills we audit. With hospital charges equating to approximately 40% of an employer groups costs, hospital overcharges alone account for 8% of an employers’ total expense. AMPS’ findings are remarkably consistent with the RAC audits being performed on Medicare claims.”

About AMPS

Founded in 1995, AMPS now has offices in Atlanta, GA; Chattanooga , TN; and Phoenix, AR. AMPS’ reviews have yielded an average cost savings on adjusted hospital claims of 20.55% (over and above PPO discounts). With an average size of claim reviewed of $51,365, this has yielded an average additional dollar reduction of $10,986 per claim. AMPS average success (hit) rate on claims greater than $15,000 reviewed is 90.5%.  Call Jim Delaney, COO, at 678-528-3041 and visit www.advancedpricing.com.

About The Phia Group

The Phia Group, headquartered in Braintree, MA, represents third party administrators, self-insured companies, insurance carriers, reinsurers, and other at-risk entities across the country. The company’s services include subrogation, claim reimbursement, overpayment recovery and coordination of benefits. The Phia Group has become one of the fastest growing subrogation companies in the nation. Call 888-986-0080 and visit www.phiagroup.com.

Editor’s Note: This article targets rental PPO networks but should have been targeted to all PPO networks as they are all essentially the same.


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