Leased Provider Networks Cause Payment Confusion

There are entities without a heath or dental plan in the market forming physician and dentist networks. These entities “lease” the network to plans that do not have a network of their own or that wish to expand their network of physicians or dentists without recruiting them individually.

Unlike any other provider of goods or services, physicians and dentists often do not know what they will be paid for their services until the payment is received. Third party payers are reluctant to make their fee schedules known and physicians and dentists routinely go in blind, assuming increased patient volume and ease of payment will make up for the unknown fee discounts. This approach can be problematic when contracting with a network leasing company.

A network leasing entity usually has contracted with multiple insurers or plans.  A physician or dentist in a leasing company’s network may have also directly contracted with some of these insurers/plans.  This results in difficulty determining the fee.

What is a physician paid for a procedure when: (a) the network leasing company has it on its fee schedule at $750; (b) the patient’s health plan that the physician also directly contracts with has it on its fee schedule at $850 and (c) another health plan that the leasing company contracts with has agreed to pay $675 for this procedure? Does the physician’s leasing company fee schedule control? Does the physician’s direct contract/fee schedule with the health plan control? Or is it the lowest of all the fee schedule amounts of the plans the leasing company contracts with that is to be paid?

It could be any one of these amounts depending on the terms and conditions contained in the contract with the network leasing entity and any network agreements the physician has entered with health plans and other third-party payers. Often these terms and conditions will conflict or there will be no terms or conditions clearly describing in advance which agreement/fee schedule controls.

Prior to entering into a network leasing agreement, physicians and dentists should carefully review its terms, insist on receiving a fee schedule and understand how their fee will be determined when there are conflicting amounts.

This article first appeared in the July 18, 2022 edition of Crain’s Detroit Business.

About the author:

Daniel J. Schulte has more than 25 years of experience helping clients solve tough problems and capitalize on opportunities that require a blend of business and legal expertise. His practice focuses on addressing the legal, business, licensing, and regulatory challenges of health care professionals, organizations, and facilities. Dan understands how legal issues impact business objectives and, as a result, offers his clients practical, results-oriented advice. He is a Certified Public Accountant, former managing partner and current executive committee member of the firm. Dan also serves as co-chair of the firm’s Health Care Practice Group.

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