Silent PPOs under scrutiny

October 1, 2009
Janet Farrer

Janet Farrer is an associate in the Austin office of Akin Gump Strauss Hauer & Feld.

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Barry Senterfitt

Barry Senterfitt is a partner in the insurance industry practice of Akin Gump Strauss Hauer & Feld LLP in the firm's Austin, Texas, office.

Model legislation adopted by NCOIL provides that the third party accessing the contract must comply with contacting terms

On November 23, 2008, the National Conference of Insurance Legislators (NCOIL) adopted model legislation aimed at regulating silent PPOs. Some states, such as Ohio and Florida, have already passed legislation restricting the use of silent PPOs and others may consider passing legislation similar to the model legislation in the next legislative session.

STATES NOT SILENT

Texas may ultimately revisit the manner in which to regulate silent PPOs when the next legislative session convenes in 2011.

Because of increased regulatory attention in this area, contracting parties, including PPOs and providers, should consider monitoring any developments with respect to the regulation of silent PPOs.

Silent PPOs are many times described as arrangements whereby organizations access discounted rates for healthcare services from healthcare providers without contractual authorization from the providers.

LISTEN TO THE LEGISLATION

Further, in an attempt to provide transparency, the model legislation contains certain disclosure requirements. For example, a contracting entity that grants access to a provider's services and discounts must identify and provide to the provider, upon request, a list of all third parties to which the contracting entity has executed contracts or will grant access to the provider's services and discounts, thereby allowing providers to determine if the networks and the discounts have been properly accessed.

Among other requirements, the model legislation also sets forth obligations for third parties that have been granted access to a provider's healthcare services and discounts, and provides that unauthorized access to provider network contracts is an unfair insurance practice. Because the regulation of silent PPOs has received national attention as well as increased scrutiny in many states, contracting parties should continue to monitor any new developments.

This column is written for informational purposes only and should not be construed as legal advice.

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