Preferred provider networks are a form of "managed care," which became popular among health plan administrators in the late '90s. They are also the bane of healthcare providers' existence.
Although preferred provider organization (PPO) laws vary from state to state, the typical mechanism involves either self-funded or fully-insured plans. Fully-insured plans are actual insurance policies in which the company name on the insurance card is responsible financially for payment of claims. A self-funded plan is one in which a lager employer merely pays an insurance company to act as the claims manager for the plan, but the money largely comes from the employer and not the insurance company.
In a PPO, physicians agree to become "in network" providers, accept a schedule of payment for services, and abide by the rules of plan sponsors and administrators. Historically, it was not common for a provider to be terminated from a network, absent some obviously bad behavior.
Plan administrators are more frequently using the threat of network termination to control utilization. Providers who may present higher than expected claims are singled out for audits and extra scrutiny. Often, providers are informed that they are being terminated before the audit process is complete.
In order to combat this, it may be necessary to file for a temporary restraining order, before termination is effective. This preserves the status quo until the administrative process has run its course.
In 2015, my office filed and obtained only three such restraining orders. Yesterday, we filed and obtained our third one to keep a provider in network in 2016, and the year is just 29 days old. This indicates that administrators are more frequently threatening to terminate our client's network status. This trend is likely being experienced across the country. If you receive a network termination letter, obtain legal counsel licensed in your state immediately to preserve your rights.