NCOIL Model Act Paves Way for Favorable State Regulation of Rental Network PPO Market

December 16, 2008


As part of an ongoing advocacy campaign to promote fair physician contracting and payment practices, the American Medical Association (AMA) has actively encouraged the National Conference of Insurance Legislators (NCOIL), which consists of lead state legislators who handle insurance issues, to adopt model legislation to regulate the rental network PPO market. On November 23, 2008, NCOIL adopted the Rental Network Contract Arrangements Model Act. This model act requires disclosure of accurate information about any entity that accesses the physician contract and associated discount and mandates that these entities must comply with the terms of the underlying contract. The model act prohibits any so-called "silent PPO" activity, which occurs when entities that do not have legitimate rights to physician discounts access discount information to inappropriately "reprice" claims. Under this model act, physicians are authorized to deny their discounts to noncomplying entities.

The AMA successfully argued that all entities engaged in leasing physician discounts in the commercial health insurance market must be held accountable to the act.

Ohio, Colorado, Connecticut, Indiana, and Florida adopted laws to regulate the rental network PPO market in 2007 and 2008, and several other states are presently considering legislation in this area. NCOIL's adoption of this model act should increase the likelihood that additional states will be receptive to legislative initiatives to increase the transparency and fairness of rental network PPO activity.

View the NCOIL statement