Whether in business, politics, or sports, forcing professionals to pay for the privilege of simply doing their jobs (aka “pay-to-play”) is indefensible.

But arguably, Preferred Provider Organizations (PPOs) are forcing a version of “pay-to-play” — in this case, “pay-to-treat” — on workers’ comp doctors and providers. In order to treat injured workers, a California doctor must pay PPOs a percentage of the state fee schedule reimbursement owed to the doctor for treating an injured worker.

As we explain below, PPOs enforce this “pay-to-treat” system by threatening providers with exclusion from Medical Provider Networks (MPNs). If the doctor refuses to sign a PPO discount contract, the doctor is kicked out of the MPN. California doctors are told they must accept “PPO Fee Reductions” as the cost for treating injured workers.

It is indefensible that California allows these Pilfering Provider Organizations to brandish MPNs as a way to bully the dwindling number of doctors willing to even treat injured workers.

Unfortunately, the true victims of these PPO/MPN pay-to-treat schemes are injured workers. Rather than paying doctors to treat injured workers, employers’ workers’ comp premiums enrich these PPOs that provide zero treatment to injured workers. California employers and their injured workers deserve better.

PPOs Hijack California MPNs

Workers’ comp payers pitch the idea of MPNs to employers as a way to organize a group of trusted providers, to which employees can turn for care. Understandably, doctors who choose to treat injured workers want to be part of MPNs in order to help ensure a steady stream of patients for the practice.

These scheming PPO entities found a devious — but effective — strategy: use employer MPNs to siphon employer dollars away from doctors. Knowing providers’ preference to be included in MPNs, PPOs and payers threaten doctors with MPN exclusion if the doctor will not capitulate to pay-to-treat.

We’ve seen this dynamic play out repeatedly; if a doctor refuses to pay the PPOs, the doctor is kicked out of the MPN.

• State Compensation Insurance Fund (SCIF) kicked a provider out of its MPN, after the provider disputed an Anthem PPO contract.
• Zenith openly stated to a doctor that “Your participation in ZMPN [Zenith Medical Provider Network] is predicated upon your contract with Anthem Workers’ Compensation…” after the doctor demanded to be released from the Anthem PPO.
• Prime Health Services sent a provider concurrent MPN and PPO participation agreements in an arguable “bait and switch” maneuver.

This MPN threat is common practice. The above represent just a few examples of PPOs forcing doctors to pay PPOs for the right to treat injured workers.

Employers & Injured Workers: The True Victims of PPO “Pay-to-Treat”

PPOs reduce a doctor’s revenue by taking a percentage of the reimbursements owed to the doctor per the state workers’ compensation fee schedules. The mechanics behind pay-to-treat involves insurers and TPAs rerouting doctors' bills to PPO entities, which then skim a percentage of the reimbursement meant to pay the doctor for treating the injured worker.

These PPO/MPN “pay-to-treat” schemes intercept employer dollars to enrich PPOs, such as Anthem Blue Cross. Employers’ money, meant to keep California’s workforce healthy, is diverted to make Anthem and other PPO entities wealthy.

As one reader recently wrote daisyBill:

"We suffer these reductions all the time. We are seeing Anthem PPO reductions because we are contracted with Anthem Blue Cross and that puts us on the list as a contracted provider and [we] have to eat the reductions. It feels like legal abuse. I have tried to fight it and it is a lost cause. I wish lawmakers would wake up and see this corrupt business practice and do something about it." [emphasis added]

The math is simple, but cruel. PPO profiteering by Anthem and its ilk is making workers’ comp financially unsustainable for providers. There is no shortage of examples showing just how rapacious these PPO “agreements” really are:

• Anthem paying a doctor less than half of Official Medical Fee Schedule (OMFS) rates for treating a Pentair employee
• Anthem and CorCare paying doctors just 5% and 6% of state fee schedule rates for treating employees of LA County and Photospin Inc.
• Dozens of claims administrators applying an Anthem discount to one provider’s bills for treating countless employers’ injured workers

The result: as our data on actual reimbursement rates reveals, doctors are clearly not the ones profiting from employers’ workers’ comp premiums. PPO entities — which provide zero services to injured workers — are subverting the central premise of workers’ comp: that employers provide the coverage so doctors can treat the workers.

Employer MPN: A Cover for Pay-to-Treat

Why would employers take part in any scheme that makes it harder for their employees to get the care they need? Because they’re sold a bill of goods by insurers and third-party administrators (TPAs), which convince employers that MPNs will improve care for their workers.

Insurers and TPAs lead employers to believe that MPNs are a benign way to organize groups of quality, “preferred” doctors. Employers often believe that better care by “preferred” doctors ultimately lowers costs.

But in reality, MPN doctors aren’t being “preferred.” These doctors are targets.

MPNs are often filled with fearful, browbeaten doctors who feel as though there is no choice but to accept PPO discounts. The result: doctors are giving up on treating injured workers altogether, because they can’t afford to “play” by the PPO regime’s rules.

As one doctor recently wrote to us:

“The problem with canceling the PPO with Anthem is that then all of the MPNs will kick us out and then we will not have any work comp patients. The original Anthem contract was signed just to be able to see Blue Cross patients. Now I rarely see any Blue Cross patients so I wouldn't care about not seeing Blue Cross patients but can't afford to then get rid of my remaining work comp patients as most do not take the drastic cuts that Anthem does.”

This leaves injured workers with less and less access to care. And now, faced with a predictable provider shortage, PPO shills are advocating states simply replace physicians with more non-physician providers willing to accept lower reimbursement rates. We can’t imagine employers being ok with this.

Every California employer should be outraged that their workers’ comp dollars are being hijacked in this way.

If California legislators and regulators won’t stand up for providers, employers, and injured workers, then providers must seriously consider standing up for themselves. Watch this space; in the coming weeks, we’ll explain why PPOs aren’t as powerful (and MPN participation isn’t as valuable) as providers may think.

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