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As insurance plans continue to refuse to negotiate with dentists, many in-network doctors have started to drop their dental insurance contracts.

Why—and how—to drop a dental insurance contract

Sept. 1, 2023
As insurance plans continue to refuse to negotiate with dentists, many in-network doctors have started to drop their contracts and shift to a fee-for-service model. Learn more.

In 1973, a convict took four hostages during a failed bank robbery in Stockholm, Sweden. Over the course of six days, the hostages developed empathy and began to defend and protect their captor. Since that event, many other robberies and kidnappings have occurred in which victims felt empathetic toward their abusers. The term “Stockholm syndrome” is used to define the psychological response where a captive develops empathy and feelings of attachment toward their captor.

Now, I’m not saying that dentists are experiencing Stockholm syndrome toward insurance companies, but the sense of attachment and dependence seems quite apparent. Insurance companies know this and, unfortunately, abuse the feelings of dependence that many dentists have toward insurance. Consequently, since the beginning of the pandemic, insurance plans have made little to no effort in raising fees/reimbursements to levels that are commensurate with inflation. In fact, many insurance plans have started to lower fees, making it more challenging for dental offices to remain financially viable.

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As insurance plans continue to refuse to negotiate with dentists, the fortunate reaction is that many in-network doctors have started to drop their contracts and shift to the highly coveted fee-for-service model. As this fee-for-service trend continues, insurance plans will be desperate to negotiate fees in an effort to keep their members (dentist providers) happy.

The solution

When it comes to negotiations, I have observed that the wave of doctors leaving dental networks (as in-network providers) is starting to cause a panic among insurance carriers. In fact, we are even seeing Delta Dental in many states open the doors for negotiations, but only for those dentists who have already submitted termination requests. With this trend on the rise, the question is, are you willing to take that risk? My thought is that you have no choice! The fee-for-service trend is on the rise, and insurance companies do not like it. Insurance companies with a robust list of in-network providers are the ones that usually dominate dental insurance sales.

I’m not advocating that you drop your insurance contracts today, but I do recommend considering it because contract terminations are influencing many insurance plans to negotiate fees. So how do you employ such a strategy effectively and prepare for the worst-case scenario in which insurance doesn’t negotiate? Here’s what I recommend:

Step 1: Get your team to stand behind you in case you need to move forward with contract terminations. The best way to get your team to support you is to create a “righteous cause” and influence them to understand that you have to make changes to protect them and your patients. Arguably, many current in-network agreements can hurt your patients by forcing you to replace quality and reliable materials or processes with less expensive alternatives that better fit the financial demand of delivering treatment. Your team needs to believe that quality is nonnegotiable, so if the solution is going out of network, you’re going to do what’s best for your team and your patients.

Step 2: Talk to your patients about the possibility of changing your participation status with their insurance. I’d say something like: “I want to give you a heads-up that while we are not committed toward going out of network with your plan, insurance is forcing our hands in making us consider out of network as an option. The bottom line is that our current agreement is too restrictive and doesn’t support our mission to give you the best care possible. To us, you deserve the best, so any decision we make will have you and our mission to give high quality dentistry in mind.” Spend a couple of months talking to your patients about this and observe their reactions. It is no surprise that many patients are reacting positively to this type of communication.

Step 3: While you are implementing step 2, immediately begin negotiating with each insurance plan. When you initiate contact with insurance, make it clear that you will give them only one chance to make things right and negotiate fees to a level that is acceptable. You can determine an acceptable level, but for me, an 8% to 10% increase to cover inflation is not enough. Do not set a limit to your desired fee increase. If you give insurance a limit and they were willing to exceed that number, you’ll lose out on the higher fees they were willing to give. Also, don’t be surprised if many of them respond by saying they won’t negotiate, as that response has worked for them in the past, leaving most dental offices without fee increases.

Step 4 (if insurance negotiates): Never accept the first offer from insurance! Compare your top codes to measure the new fee schedule and then send a counter proposal to request more. While you are only comparing your top procedure codes, request that the entire fee schedule be increased again. If you receive another offer, continue to request a fee increase on each subsequent offer. Follow this counter proposal method several times to ensure that you are obtaining the highest offer available. If a final offer is given and is acceptable, proceed with the acceptance paperwork and don’t forget to ask for both an effective date and an expiration date for the new fee schedule.

Step 4 (if insurance doesn’t negotiate): It’s true that many insurance plans will not negotiate until you attempt to terminate your contract. I believe that if you initiate terminations, it is absolutely best to commit to full terminations unless insurance comes back with a fee offer you cannot refuse. For many of you, full out of network will be the most ideal position to be in, especially if you’ve given your patients advance notice about the potential of going out of network with their plan. For out-of-network transitions, great customer service and advanced patient notice are key. You’ll be surprised that even if you make that move, most of your patients will stay with you. If you choose to proceed with out of network, make sure you notify your patients again so they feel included in your decision to transition out of network.

A reliable confidential source at a major insurance company shared with me that approximately 2% to 5% of in-network doctors in most states have dropped it in 2022. As a response, this particular organization started to raise fees automatically and have eased up on certain contractual restrictions that were previously unavailable to certain doctors. In short, all insurance plans are in a panic and are making changes to make their in-network provider contract and fees more “dentist-friendly.”

In my opinion, insurance plans have had their chance to make things right and set fees at more sustainable levels. The pandemic has caused doctors to think twice about their participation with insurance, and the results are positive for you and for the future of dentistry. The data is clear: insurance dependence is, dare I say, a bit like Stockholm syndrome. It’s not that those in bondage are bad people who make terrible choices. No! It’s more about the abusers taking advantage of the innocent and making them feel a sense of dependence toward their hostage-takers. In dentistry, the data is clear that insurance companies need you more than you need them. I recommend pushing hard to negotiate your PPO fees or get out of those insurance contracts to protect the financial integrity of quality dentistry! 

Editor's note: This article was revised to remove a reference to Delta Dental of California’s retention of dentists in California and to remove the name of an insurance provider in the second-to-last paragraph of the story.

This article appeared in the August 2023 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.

About the Author

Benjamin Tuinei, president of Veritas Dental Resources

Benjamin Tuinei, president of Veritas Dental Resources, works to help dentists improve insurance reimbursements. He has been recognized by several state dental associations and continuing education institutions as “the authority” on PPO strategies and fee negotiating. He has worked with 9,000-plus dentists and influenced more than $5 billion in negotiated revenue for his clients. To learn more, visit veritasdentalresources.com.

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