Working the “Spread” – Another PPO Revenue Stream


By Molly Mulebriar

In our continuing efforts to expose insurance industry secrets that drive up health care costs, we find more evidence of third party skimming through managed care contracts.

In material left on our office door step in an unmarked brown paper bag over the weekend, we found a BUCA Administrative manual devoted to their managed care business. Sensitive to the BUCA’s penchant for keeping their inner business dealings secret, we have redacted portions of the document to (1) Avoid a lawsuit, and (2) Keep the reader guessing.

“Under some network vendor relationships, the vendor is responsible for contracting with the providers who perform the health care services, and potentially also for some other services related to those providers such as claims processing, credentialing, and utilization management. Under some of these arrangements, the vendor bills (BUCA) directly for those services by its network of providers, at the vendor’s contracted rate with (BUCA), and (BUCA) pays the vendor for those services. In some cases, the amount billed by the vendor to (BUCA), paid by the plan, includes an administrative fee for any delegated services by the vendor. As a result, the amount the vendor pays to the health care provider through the vendor’s contract with the provider may be different than the amount paid by the plan because the allowed amount under the plan will be (BUCA’S) contracted rate with the vendor, and not the contracted amount between the vendor and the health care provider.”

After reading this one of our staff members mused “how do independent, expert insurance consultants take into account these hidden fees when comparing managed care contract pricing for their clients? Or are they universally ignorant of these fees?”

This is just more evidence that not all the so called PPO “discounts” are passed on to the consumer.