Bait and Switch Tactics - A Hypothetical Contract Recruitment Scenario
A Discussion Paper
Overview of Bait and Switch
"Bait and switch" is a deceptive marketing practice where a company advertises an attractive offer (the "bait") to lure customers in, only to substitute it with a less favorable deal (the "switch") once the customer is engaged. This tactic is considered fraudulent because it misleads customers about the true nature of the offer.
The Bait
The Healthplan X offers providers a contract with an incentive Program (BHIP), which is presented as a value-based agreement. It promises a 6% bonus for performance measurements, portraying the contract as a beneficial, innovative opportunity aligned with federal and state guidelines for value-based care. Additionally, the contract promises an additional 3% increase in reimbursement rates in a specific risk pool, creating the expectation that providers will receive better compensation and financial incentives to offset a declining reimbursement rate with no adjustment for inflation.
The Switch
Once providers are engaged, they discover that the promised 9% bonus does not cover the 12% cost required to conduct performance measurements. Furthermore, the reimbursement rate is projected to decline by 3.5% per year with no adjustment for inflation, significantly reducing the actual value of the contract. Providers are not informed that the contract's primary purpose is to help the Healthplan X retain its multimillion-dollar contracts with state and county employees and qualify for additional incentives from the Aligning for Value-based Contracts Program. This critical information, which impacts the contract's value and implications, is concealed. The contract is structured to appear as a genuine value-based agreement, but it lacks adherence to established guidelines and fails to provide the anticipated benefits. The Healthplan X representative's ignorance of what a "risk share" entails further underscores the ill-defined or misleading nature of the offer.
Why is this a Bait and Switch
The Healthplan X attracts providers with the promise of a beneficial value-based contract, enhanced reimbursement rates, and performance bonuses, which constitutes the bait. After providers commit, they face unfavorable terms such as inadequate bonuses, hidden costs, declining reimbursement rates, and a lack of transparency regarding other providers in the risk pool, which constitutes the switch. The Healthplan X's actions provide evidence of an intent to mislead providers into signing the contract by offering seemingly attractive terms upfront, only to reveal less favorable conditions later. The practice appears to be intended to benefit the Healthplan X by securing large contracts and additional incentives at the expense of the providers.
Legal and Ethical Implications
Providers do not have the training or resources to challenge Healthplan X’s in court. A bait and switch tactic undermines trust between providers and can lead to long-term damage to professional relationships and cooperation. Such deceptive practices involved in a bait and switch can be subject to legal scrutiny under various statutes, including fraud, false advertising, and consumer protection laws. Providers may have grounds to pursue legal action against the Healthplan for misrepresentation and breach of contract. Such tactics may also attract the attention of regulatory bodies, such as the Federal Trade Commission (FTC), which can impose penalties and require corrective actions to address deceptive practices.
Conclusion
In this example, the Healthplan's contract with providers based on an incentive provision is analogous to a bait and switch tactic. The Healthplan has significant risk of financial benefit which is not being shared with Providers who are “being taken for a ride”. The Healthplan uses the promise of a beneficial value-based contract and attractive incentives as bait to lure providers in. However, once providers commit, they face less favorable terms, hidden costs, and declining reimbursement rates, representing the switch. This deceptive practice undermines trust, violates legal and ethical standards, and may result in legal action and regulatory intervention to protect providers and maintain fair competition in the healthcare market.
For more information about being “taken for a ride” see:
How Can Mental and Behavioral Health Provider Practices Recognize They are Being “Taken for a Ride”?
https://www.mentorresearch.org/in-what-ways-are-mental-and-behavioral-health-provider-practices-being-taken-for-a-ride
DISCLAIMER and PURPOSE: This discussion document is intended for training, education, or research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.
For more information see: https://www.mentorresearch.org/disclaimer-and-purpose