When there is clear case of selling contract discounts via a bill review company the Courts nor the
California Law Makers (Labor Code § 4609) have tolerated such abuse.
The most difficult aspect in reveling the abuse of the selling of contract discounts is to sort through the maze
of agreements to show that abuse in the selling contract discounts that have taken place.
A "Silent PPO" is created when the PPO gains additional revenue by selling its reduced provider rates to
payors (i.e.,, Work Comp Insurers) who are not party to the preferred rate agreement with provider
panels and who do not provide incentives for their beneficiaries to see these providers.
Richard Balzano, Applicant v. City of Los Angeles, PSI, Defendant, 2005 Cal. Wrk. Comp. P.D.
LEXIS 16, Opinion Filed April 13, 2005
Labor Code § 4609 begins with the intent of the code and that being prohibiting the selling of contract
discounts:
Senate Bill 559, which is the bill that created Labor Code § 4609 in the Assembly Analysis as to the
purpose of the bill stated as follows:
Susan Olsufka v. City of Sacramento 2005 cql. Wrk Comp. P.D. Lexis 27 Filed August 11, 2005
Woodruff v. Greenfield Trucking, W.C.A.B. No. BAK 0141023 (Sept. 4, 2007), 2007 Cal. Wrk.
Comp. P.D. LEXIS 93 -- (Appeals Board panel decision). 9WCAB Rptr 10,337 (Nov 9, 2007)
California Law Makers (Labor Code § 4609) have tolerated such abuse.
The most difficult aspect in reveling the abuse of the selling of contract discounts is to sort through the maze
of agreements to show that abuse in the selling contract discounts that have taken place.
A "Silent PPO" is created when the PPO gains additional revenue by selling its reduced provider rates to
payors (i.e.,, Work Comp Insurers) who are not party to the preferred rate agreement with provider
panels and who do not provide incentives for their beneficiaries to see these providers.
Richard Balzano, Applicant v. City of Los Angeles, PSI, Defendant, 2005 Cal. Wrk. Comp. P.D.
LEXIS 16, Opinion Filed April 13, 2005
- “The parties stipulated at trial that Diversified is listed as a ''payor'' on CCN's payor list. According
[sic] the definition of ''payor'' (supra), Diversified can only be classified as such in the capacity of an
''employer''. They are not an insurance carrier, health care service plan, non profit hospital service
plan, nor a governmental unit or any other entity which has an obligation to provide medical benefits
to a beneficiary. Diversified can be a ''payor'' only in so far as their own employees (i.e.
beneficiaries) are concerned. Testimony at trial was that Diversified did not pay any of the City of
Los Angeles's bills they merely provided bill review and discounts and told the City of Los Angeles
what they recommended the City pay. The City of Los Angeles actually paid the bills for medical
treatment in this case.”
Labor Code § 4609 begins with the intent of the code and that being prohibiting the selling of contract
discounts:
- a) “In order to prevent the improper selling, leasing, or transferring of a health care provider's
contract…”
Senate Bill 559, which is the bill that created Labor Code § 4609 in the Assembly Analysis as to the
purpose of the bill stated as follows:
- “ Purpose of the Bill . The California Chiropractic Association and the California Healthcare
Association, representing hospitals, are sponsors of this bill. The sponsors indicate the bill is
designed to stop "silent PPOs" from inappropriately marketing and selling lists of provider "panels"
that offer discounted rates. Preferred Provider Organizations (PPO's) are a type of managed care
organization under which providers accept reduced payments in exchange for increased patient
flow. Under these arrangements, individuals insured by a PPO plan are encouraged to use that
plan's "preferred providers" because the insurer pays a much higher proportion of the cost of
service when it is rendered by a preferred provider.
- The sponsors argue a "silent PPO" is created when the PPO gains additional revenue by selling its
reduced provider rates to payors (e.g., insurers) who are not party to the preferred rate agreement
with provider panels and who do not provide incentives for their beneficiaries to see these
providers. These unauthorized discounts cost hospitals and physicians large amounts of money. In
many instances, the bill's sponsors assert that providers never intended to extend discounts to these
additional payors and had no knowledge that their services had been sold. The sponsors argue this
bill is necessary to reject such "silent PPO" efforts without the fear of contract termination. “
Susan Olsufka v. City of Sacramento 2005 cql. Wrk Comp. P.D. Lexis 27 Filed August 11, 2005
- “It must be kept in mind that it was defendant, not Cambridge, that retained or authorized the
services of lien claimant in this case. The evidence indicates an after-the-fact reduction by
Cambridge based on a contract, that was never offered into evidence. Without this contract, the
WCJ was, and remains, unable to determine if lien claimant agreed to be bound by the PPO price
any time an employer or carrier retained Cambridge to review a bill.”
Woodruff v. Greenfield Trucking, W.C.A.B. No. BAK 0141023 (Sept. 4, 2007), 2007 Cal. Wrk.
Comp. P.D. LEXIS 93 -- (Appeals Board panel decision). 9WCAB Rptr 10,337 (Nov 9, 2007)
- “The undersigned WCJ agrees with the general proposition asserted by Good Samaritan in its
Response to SCIF’s Petition for Reconsideration that there is no showing that SCIF has complied
with the provision of Labor Code 4609 and that such a so called “Silent PPO” is statutorily
prohibited. In this case, contrary to the provisions of Labor Code 4609, Blue Cross appears to
have sold its PPO Discount to SCIF in contravention of this labor code provision.”
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