Solving the PPO Puzzle

by | Nov 5, 2018

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Ever seen one of these? This is the simplest way to explain the possibilities of “leasing/sharing” that can take place between insurance companies and the endless number of combinations any practice can utilize.

Each insurance company leases several other insurance companies or networks within insurance companies. These leasing agreements overlap and can vary by state or area. Furthermore, current contracts and/or leasing defines precedence, fee limitations and can certainly affect your bottom line in a negative way. Every company you are, or aren’t participating with is defining your “PPO Structure”.

Each and every time you put your signature on an application, you are potentially agreeing to accept a contracted fee for multiple networks/plans and even accept different fees for a network you were already participating with through another company. And these carriers aren’t quick to tell you how or who they lease to, some don’t even know until claims are processing.

Ever hear of a Third Party Administrator? This is where things can really get confusing. TPA’s aren’t even insurance companies in most cases. They are like insurance “outlets”. Sign a contract with a TPA and you could be a participating provider in up to 200 networks at any given time. TPA’s can be friend or foe, there is certainly a place for strategic placement of TPA’s with most practices who are looking to maximizing exposure and revenue simultaneously.

How Do Leasing Agreements and Third Party Administrators Affect Insurance Optimization?
Insurance optimization success is directly linked to understanding your current and potential leasing options. In fact, that is the single best piece of leverage one can use when negotiating current fees or when considering adding new participation.

Let’s say you ask Company X for a higher fee schedule and they say no. You can scream and shout and point out all the reasons you deserve better compensation, and perhaps Company X will hand you a standard increase of 1-2%, perhaps not though. Truth is, there is an algorithm for making these kinds of decisions within an insurance company, and your opinion or clout is hardly factored into it. But here’s what is … Recognizing current and potential leasing ability, precedence and advanced solutions to restructure. Creating a valid argument with the factors that matter to the company is key … leverage like this can be the difference in 2% and 20+%.

But wait … Ever thought you were clever because you finished one side of the Rubik’s cube? Just to realize that any attempt to complete another side would destroy the hard work you put into the finished side. This, my friends, is what insurance has become. Every single piece you change is affecting another piece. You cannot move exactly one piece of a Rubik’s cube without subsequently moving several additional pieces.

Your practice has a great rate of compensation for Company A through a leasing agreement. You also see Company B, C, and D out of network and collect your full office fee. The school district down the road really wants you to accept their new insurance plan with Company X and even though the fees are lower than you’d like, you want to do a favor for the members of the school district. You sign a new contract with Company X and suddenly Company A’s compensation is cut in half because you weren’t aware of leasing precedence. You now also have “in-network” status with Company B, C, and D with the same terrible compensation.

Needless to say, solving the puzzle can seem impossible. That’s why so many Rubik’s cubes are missing stickers.

There is no exact process we can share to help you understand the full potential of insurance leasing, nor can we provide one or two cut and dry solutions. Everyone’s cube is put together in a different way, there is almost always a better PPO structure to be recognized though. Understanding the ins and outs of insurance leasing and creating a unique structure that works for your practice can mean tens of thousands of additional dollars annually. We’ve spent years mastering this process and have yet to see the same cube twice.

So here’s the deal, anyone can “learn” to solve the Rubik’s cube — just like I could “learn” to extract my own tooth… but it’s just easier to let the pros do it for me. You’re good at what you do, just like we are good at what we do.

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