Here’s a way to balance PPO participation and add thousands to your bottom line
Most every week I talk to doctors who are writing off $30,000–$50,000 and more every month. Worse, some of them have no idea how much they write off. But when we look into it, we often find that the amount is more than $50,000 per month.
I first wrote about preferred provider organizations (PPOs) for Dental Economics 20 years ago,1 and since then, there has been a PPO epidemic. Dentists have been signing up for PPOs left and right. Now it’s time to learn how to “unsign” up.
You can lose the discounts and still keep your patients. Patient loyalty is stronger than PPO participation. I am not suggesting that you drop all PPOs. Instead, balance your participation by assessing and systematically cutting back on the PPOs that sap your bottom line.
In 2018, the average collection percentage in our area was 82%. Now, as the trend continues, the average collection percentage is 79%. Working one out of every five hours for free due to discounts is bad enough, but many doctors have it even worse.
So, how do you get started?
First, find out which PPO plans you have contracted with. It’s not at all uncommon for doctors not to know all of the PPOs they’ve signed up with. You may even be enrolled with a certain plan and then find out that plan spreads into other insurance plans (so now you are seeing those patients at a discount too).
- Make a graph of the fees as Exhibit A. Piles of fee schedules won’t help you sort things out. Looking at the fees side by side (table 1) really helps you see what’s going on. It will also put fire in your belly!
- Next, get an idea of how many patients you have on the main plans your office contracts with. Note the number of patients with each PPO.
- Now, set those things aside and look at your practice. Ask yourself the following questions:
- Are you at or near your ability to keep up with patient care? Are you close to being maxed out with no plans or desire for expansion, adding more doctors, etc.? (If you are nearly maxed out, why are you working at a discount?)
- Do you have a good team that believes in the care your practice delivers?
- Are you generally well organized with up-to-date administrative systems?
Fortunately for dentists and patients, most practices have been quite busy postpandemic. I think that during the COVID shutdowns, doctors started asking themselves, “Why am I running around like a chicken with my head cut off because of write-offs?”
There is a real danger that you can inadvertently create an atmosphere in which patients only like you for your PPO status. This is not the outcome you want! If your practice is busy, you have a good team and a good organization, you’re ready to roll.
Choose a plan that is perhaps a relatively modest part of your practice, one in which, say, 5%–15% of your patients are enrolled. Check with the major groups in that plan. How are the out-of-network benefits? In most cases, they can be surprisingly good. The reason for that is because employers buy dental insurance to make their employees happy. Of course, they want a low cost for premiums (thus the pressure on PPOs to reduce fees), but almost as important, the perk won’t make employees happy if they can’t go to the dentist of their choice. That’s why the great majority of insurance plans have decent out-of-network benefits. These benefits are good enough to keep most patients who are already happy in your practice, in your practice.
Next, contact the PPO and ask for the network manager or provider relations. Request that they increase your fee allowance. Many will say they don’t do that. If that’s the case, send them a drop notice. Many times, the PPOs that say they don’t negotiate will start negotiating. If not, you are ready to leave the plan and keep the patients.
Prepare your team
Sometimes insurance companies will send letters to their patients discouraging them from visiting your office. You must come up with a counter campaign. This is not necessarily just another letter. It might be calls and letters. It’s very important that you get the last word. I disagree with advice saying you should send out letters before the insurance company does. Instead, wait until the insurance company sends a letter (they often don’t, and that includes Delta), and then you can react to their specific letter. In cases like these, it’s better to be reactive than proactive.
Most of the time, though, insurance companies won’t send letters. We generally advise against “letter wars.” Here are three goals to keep in mind:
- Minimize the loss of patients.
- Slow down any loss of patients.
- Handle things tactfully so that your team and patients are comfortable with the process.
Letters accelerate the process. Once letters are sent, they can’t be unsent. Many times, they aren’t read or are misunderstood. You may feel that it helps to “cover your butt” with a letter, but patients will still get upset and confused. It is much better to talk to patients face-to-face. Please see my previous two articles on this.1,2
The umbrella PPO epidemic
At first, it was just a matter of signing up with individual PPOs, such as Aetna, MetLife, Guardian, etc. But a few years ago, umbrella networks came into the market. To compete with the bigger companies like Delta, a bunch of PPOs would get together under one network. That network would arrange for providers (doctors) and thus help the smaller plans market to employers.
Then the networks started overlapping. It’s not unusual to see a plan (e.g., MetLife) in several networks such as Connection, DenteMax, and Zelis. Sometimes there are networks within networks. That’s why Kristan Palmer of e-DentalMarket calls it the “network epidemic.” If you are in several different networks plus individual plans, you will find that even if a certain payor (i.e., an insurance company) is in several networks, whichever one pays you less is what you’ll get! Also note that sometimes you can get better reimbursement being in a network than directly participating with a PPO or vice versa. Sometimes you can be in a network and opt out of some of the individual PPOs if the conditions are right.
I’ve seen situations in which doctors drop one umbrella network to join another, but some of the plans fall out of network and that spooks some into not making the transfer. I think it is an advantage that some plans drop out of network, because it’s a way to cut back on your discounts incrementally. It’s great to get the best fee you can through negotiations with PPOs, but it’s even better if you get your full fee by going out of network. Again, it’s easier than you think to be out of network with most plans.
Some PPOs, however, have punitive out-of-network benefits—i.e., little or no coverage for patients—so you will lose most of those patients. Still, if a plan is paying half of your usual, customary, and reasonable (UCR) fees, even your patients may wonder whether their doctors are so desperate to be busy that they’ll work for half of their fees.
There is a matter of equity too. In many of the practices I work with, 20%–40% of their patients have no insurance. These people are paying full fees while others are, in effect, getting 30%–50% discounts through their PPOs. How do you justify that? There is always going to be some inequity given the realities of insurance, but there must be a point when you say enough is enough. We have helped many dentists cut back on PPO participation, and we keep track of the data before, during, and after. These dentists keep plenty busy after dropping PPOs and enjoy getting better paid for what they produce.
It’s a lot easier to sign up with PPOs than it is to get off them. If you are deep into participation, you will want to approach this systematically just like you do any other aspect of practice (e.g., recall, treatment follow-up, new-patient intake, scheduling, etc.). As I have often stressed, it’s important not just to leave PPOs; you need to be working toward something. A PPO transition can be a great opportunity to create a renaissance in your practice. Reexamine what makes people like you for more than your network status. It’s critical to fortify your practice with solid systems, a good website, etc.—all things you know you need to do but don’t have time to because you’re busy trying to outrun low PPO fees. Find the right balance for your office.
- Rossi B. PPOs? Doctor, you have more power than you think. Dent Econ. November 1, 2018. https://www.dentaleconomics.com/practice/article/16384893/ppos-doctor-you-have-more-power-than-you-think
- Rossi B. Cutting out the PPOs. Dent Econ. March 1, 2001. https://www.dentaleconomics.com/practice/article/16390035/cutting-out-the-ppos
BILL ROSSI has been advising dentists and their teams for more than 35 years. He is an ally for private and independent practices in a profession increasingly impinged on by corporate dentistry and PPOs. Contact him at [email protected], (952) 921-3360, or advancedpracticemanagement.com.