A new approach has recently emerged that appears to provide a legitimate and practical solution to the issue of out-of-network expense management.  Unlike claim re-pricers that simply take provider discounts, this method uses a financial mediator or factor to purchase out-of-network claims, settle them with the provider, and pay them with their own funds, before receiving payer reimbursement.

Employing direct one-on-one negotiations, the savings derived are a result of bargaining or as a fair inducement to the prompt payment of the claim within days of the provider’s submission.  The decision by the provider to accept or reject a settlement proposal is voluntary and overt and, much like claim negotiation, agreements are memorialized in writing or on tape.  As such, this method establishes a legal, direct contractual relationship between the provider and the payer based on a bargain for exchange and a meeting of the minds and there is no misrepresentation to the physician.

Using this approach, settlements are not based on the premise that the claim will be paid at the in-network benefit level, thereby preserving the integrity of the underlying PPO plan design.  This method supports compliance with plan document and stop loss provisions, eliminates any exposure to increased plan cost for the payer or re-insurer, and may be used with all primary PPO networks as there is no logo requirement.  Moreover, this method mitigates the risks associated with discount reversals, denials, and provider litigation for the plan sponsor, plan participant and re-insurer.  And, unlike other methods, the cost of obtaining the discount is shared equitably by the payer and patient.

Initial reports are that most of the providers who have been introduced to this concept enter into an “opt-in” agreement to automatically enable repeat transactions.  As such, claims as low as $1 may be processed by these means and the savings able to be achieved through this claim settlement process can exceed those of the other methods.  This approach to out-of-network expense management has been endorsed by many large regional and national PPO networks as it not only averts the ills associated with silent networks it meets the 5 criteria noted above.