Auto insurers face pushback over preferential deals with health care providers

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Health care professionals are warning that auto insurers are increasingly signing preferential deals with providers that are controlling patients’ choices about how to get injuries treated after car accidents.

A proposed agreement between Manulife Financial Group MFC-T and Shoppers Drug Mart recently thrust the issue of preferred provider networks (PPNs) into the spotlight. Under that deal – which was later cancelled – chronically ill patients would have been limited to buying their medication only at pharmacies owned by Loblaw Cos. Ltd. L-T.

But similar agreements have become increasingly common across the insurance industry – including among auto insurers.

Health care professionals who work with accident victims say these deals direct more business to large physiotherapy chains, such as the Loblaw-owned Lifemark, and they can create conflicts of interest in which the terms of a contract could unfairly dictate the treatment that a patient receives.

Kyle Whaley has experienced the issue from both sides of the table. As a physiotherapist and owner of Propel Physiotherapy, he has treated many patients who were injured in auto accidents.

Last summer, he was in a collision himself and got a concussion. At first, he figured he could find his own physiotherapist. But he then decided he wanted to experience a PPN system himself. “I thought, you know what, I’m going to go through this process and see what it’s like,” he said.

He booked an appointment with one of the three clinics his insurance company recommended. On the morning of the appointment – a week and a half later – the clinic called to cancel, saying it didn’t have the right specialist available that day.

Then, he said, he got a call from his insurance adjuster. She was calling on behalf of the clinic, offering to reschedule his appointment.

He said having his insurance company try to directly book his care crossed a line for him because it gave the insurer more control over his medical care. “This is completely unethical,” he said.

Auto insurers began exploring PPNs more than 20 years ago. First they were for preferred mechanics to fix vehicles, but recent PPNs have extended into health care coverage, too.

Manulife drug plan members continue to face barriers when trying to fill prescriptions at pharmacies of their choice

There are different types of PPNs. In “open” networks, patients are given a list of recommended providers, although they can go somewhere else if they choose. In “closed” networks, the plan member is restricted to only approved providers.

Four auto insurers that spoke to The Globe and Mail – Aviva Canada, Intact Financial Corp. IFC-T, TD Insurance and The Co-operators Group Ltd – said they currently operate open networks. Allstate Corp. ALL-N declined to comment. The Insurance Bureau of Canada said PPN agreements used by auto insurers are voluntary and customers are still able to use any service provider of their choice.

Insurance companies have said they believe PPNs are better for customers. “Really the biggest benefit is to help deliver consistent value, quality at a predictable pricing structure,” said Rob de Pruis, national director of consumer and industry relations at the Insurance Bureau of Canada.

One reason insurers cite for setting up PPNs is to combat fraud by vetting providers in advance. In 2016, Aviva publicized an undercover investigation into one Toronto physiotherapy clinic that the company said was filing fraudulent claims, and three people were charged by police. Aviva said it operates a PPN, but that clinic was not part of it.

In a March 1 post on the Aviva website for customers, the insurer said choosing a non-preferred provider “may expose your claim to additional risk, including fraud,” and there could be delays in processing and reimbursing such claims.

The Ontario government and the Financial Services Regulatory Authority of Ontario (FSRA) proposed in a 2021 public consultation paper that insurers should “enhance” the use of PPNs as a way to cut down on fraud.

The Ontario Finance Minister’s office declined to say if it is currently considering any legislative changes to encourage PPNs.

FSRA says while there are benefits to using PPNs, it recognizes they can create a conflict of interest because there could be a financial incentive that influences the health outcomes. Therefore, insurers who use PPNs have an obligation to be fully transparent with consumers and disclose such arrangements directly with clients.

“Consumers should be told that their participation is completely voluntary, they have the right to choose a different service provider, and can withdraw from a program of care with a PPN at any time, without penalty,” FSRA spokesperson Ashley Legassic said in an e-mail.

However, the IBC and FSRA both told The Globe they do not provide oversight into how insurers vet and select the providers in their PPNs.

Ms. Legassic said auto insurance companies are under no obligation to include a specific service provider in their PPN, and they can include or exclude providers as they see fit.

These PPN agreements involve some of the biggest players in the health industry.

Lifemark, owned by Loblaw, provides services that include physiotherapy, massage therapy, chiropractic treatment and rehabilitation. It already has more than 300 clinics across Canada, and promotes itself to other clinics, either as a potential acquisitor or offering them a chance to sign on as an affiliate clinic that receives referrals from the chain – with the possibility of benefiting from Lifemark’s PPNs with insurers.

Lifemark did not respond to a question about how many PPN arrangements it has. A “preferred affiliate” contract sent to one clinic, which was reviewed by The Globe, included a list of customers who have a “preferred provider agreement or similar arrangement with Lifemark.” Those customers included major insurers such as Allstate, Aviva, the Co-operators, Desjardins, Intact and TD Insurance, among others. (The Globe is not identifying the clinic because the owner was not authorized to share the agreement.)

Lifemark spokesperson Brenda Grob confirmed in an e-mail that the company “participates as a preferred provider network for a number of insurance companies,” but declined to say whether the list of insurance companies in the contract was up-to-date or complete.

However, Ms. Grob said, “every insured patient has full choice on where they choose to seek care.”

The contract also says that any clinics who sign on as “preferred affiliates” are subject to paying an “administrative fee” to Lifemark that is worth 15 per cent of the total amount charged to each file by a client referred by Lifemark. Ms. Grob said the fee covers costs related to supporting “the clinic and the patient through the insurance process.”

Laurie Davis, executive director of the Ontario Rehab Alliance, which represents nearly 4,000 health care professionals in Ontario, said such a charge seemed to be a referral fee. “This essentially amounts to: I’m paying you to send me people,” she said.

The Ontario College of Physiotherapists has conflict-of-interest rules that forbid physiotherapists from either paying or receiving fees for clients referred to them.

When asked by The Globe about the fee, the college said only that it “does not currently have specific guidance related to preferred provider networks.”

Although regulators say patients must be informed about their choice of provider, health care professionals worry transparency is lacking and posed to get worse.

Last year, FSRA released a consumer research report that contained survey data on various options to reduce auto insurance premiums. The poll of 1,455 Ontarians found 33 per cent would be willing to sign on to use an insurance company’s preferred providers in exchange for a premium cut.

Ms. Davis said her group found the survey question concerning because it suggested the regulator could encourage the use of closed PPNs and further limit patients’ treatment options.

“At time of auto insurance purchase or renewal, most consumers will be driven by achieving the lowest premium cost possible, with little understanding of the impact of this decision,” the alliance wrote in a letter to FSRA in December.

Editor’s note: An earlier version of the story stated The Co-operators Group Ltd. declined to comment for the story. The company did provide comment prior to deadline that they currently operate an open PPN.