Last Night’s Junto Recap, from Chris Tucker : Daily Speculations

 Smith explained how insurance providers make more money repricing claims than they do collecting premiums. Incentives are in place for the insurance carriers to seek out the highest cost providers.

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?”

via Last Night’s Junto Recap, from Chris Tucker : Daily Speculations.