He explains it like this on his blog:
Nobody talks about this one: PPO repricing. You see, some PPO’s (actually all of them I think) charge PPO repricing fees. This means that if the PPO pays $10,000 to a facility for a surgery or hospitalization that the facility charged $20,000 for, the PPO, by virtue of having “repriced” this procedure or hospital stay, gets a percentage of the money they” saved” whoever was paying the bill…usually no more than 25%.
“Wait a minute,” you say! “You mean the PPO collects the premiums, then maximizes their profit by ratcheting down the payment to the physician and facility but also makes a percentage on the difference between the beginning and ending bill amounts? So the higher the bill is to start with, the more they make?”