Insurance Freedom: does it exist?

May 1, 2003
Total insurance independence is possible — and practical. Dentists are free to choose the level of participation that's best for their patients and their practices.

by Dr. Michael Dolby

The catch phrase for dental practices in the new millennium is to become "Insurance Free." The idea of completely eradicating the frustrations that insurance companies create for you and your team is very appealing. Most dental consultants advice offices to eliminate the processing of insurance claims altogether and delegate this burden to patients — after all, it's "their" insurance plan.

The introduction of dental insurance completely changed dentistry. For example, in the 1950s, the average maximum allowable benefit was $1,000, and the average cost of a single crown was around $150. The benefit compared to the cost of dental services made dental insurance extremely valuable and beneficial for both the patient and the doctor. Today the situation is entirely different. Average maximum allowable benefits for most insurance companies are still only around $1,000, although some exceptional plans exceed $1,500. If we compare this with today's average single-crown fee of $800 and add paper work, supporting documentation, and delays that accompany the claims process, it's easy to see why there is so much frustration with the inadequacies of dental insurance.

Today we see three principal relationships among dental offices: 1) The Insurance Dependent Practice; 2) Insurance Hybrid Practice; and 3) The Insurance Independent Practice.

The Insurance Dependent Practice

In this environment, the success of the practice is solely dependent on the relationship with insurance companies. In other words, the practice does not receive compensation from the patient; they depend on claims reimbursement as the primary source of income. There may be some effort to collect the remaining fees from patients; however, the bulk of the practice income is directly tied to the insurance reimbursement.

The main advantage of operating in this environment is a constant influx of new patients to the practice. These patients come to you because your name is on a "Preferred Provider" list (or, in the case of Delta Dental, a "Prime Dentist.")

The disadvantages in this practice environment are many. Overhead is generally inflated and treatment is limited to basic restorative procedures due to the high volume of patients. Insurance companies encourage a "if it doesn't hurt don't fix it" mentality, and basically control the way you practice. They determine the amount you can charge for procedures and even whether you can require the patient to pay for any part of the bill not covered by the plan. Preapproval for all but the most basic procedures also is usually required, meaning even more paperwork and red tape.

The Insurance Hybrid Practice

In this environment, the practice blends dependency along with some independence from dental insurance companies. The office submits the patient's insurance claim and waits for insurance company to reimburse them. Once the reimbursement has been received, the practice bills patients for fees not covered by their insurance plan. This type of practice receives new patients from both internal referrals and external referrals as a benefit from having their name listed as a "member dentist" of one or several insurance plans.

A steady stream of new patients is again one of the main advantages to this type of practice. Existing patients will refer some friends and family members; however, the majority of new patients are coming to you because of your involvement with their insurance plan rather than for the services you perform.

This type of practice usually requires a full-time "insurance billing coordinator" because of the incredible volume of insurance claims. Overhead is always a concern due to inflated accounts receivables that comes from the large amount of patient billing. This environment provides some insurance independence, although a close relationship with the insurance companies is necessary for survival.

The Insurance Independent Practice

In this environment, practice success is independent from the influence of insurance companies. This type of practice requires the patient, not the insurance company, to be responsible for fees that are incurred. Patients are expected to clear their balance at the time the service is rendered. However, the dental office team can submit claims for patients as part of a five-star customer service mentality that must accompany this type of practice. Patients then receive their insurance benefits directly. Insurance companies usually process these claims in a timely manner since they are dealing directly with their customer and not with a third party. A one or two -week turnaround is not uncommon, as compared with three to four weeks for dental offices.

The advantages in this business model are many. Lower overhead, increased patient acceptance of elective dentistry, and increased profits are just a few of the advantages to this type of practice. Eliminating patient billing gives extra time for the team to provide outstanding customer service.

The greatest hurdle in an insurance-independent environment is educating patients about the limits of their benefits. Insurance companies have had an incredible head start on dentists in this arena. They have been marketing and educating patients since the early 1950s on the benefits of dental insurance. Patients are slow to realize that these so-called benefits are really quite limited. They have been led to believe that dental insurance was somehow a free ticket redeemable at any and all participating dental offices. However, once patients have the opportunity to experience working with their insurance company, they quickly see how little benefit their plans provide. They soon become an ally for your office vs. seeing your office as the only dentist that has fees above the "usual and customary" amount, as the insurance company would like to suggest.

Outstanding customer service and a consistent marketing program is a must if you are to be successful in an insurance-independent environment. Many offices I visit believe they are delivering five-star service; however, after deeper investigation, I usually find out that customer service is inconsistent and below par. It takes an incredible team with impeccable organization and a dentist leader to fully achieve the five-star customer service necessary to for an insurance independent practice. (I will discuss a step-by-step approach to achieving this level of customer care in your office in a future article.)

All of these insurance environments have some type of relationship with dental insurance companies. The idea of establishing an "Insurance Free Practice" and eliminating insurance processing altogether simply cannot exist within a practice that is striving to achieve long-term success. So many doctors return from seminars that preach "Insurance Freedom" and then proceed to completely eliminate insurance from their practices without any kind of transition plan in place. They soon find themselves dealing with a harsh and negative response from patients along with deep financial challenges.

Striving for a practice that operates in an "Insurance Independent" environment is very achievable. A strategic three- to-five year plan must be established along with putting together an outstanding team that believes and supports this new-practice vision.

Dentists still have the opportunity to choose what type of relationship they want with their patients' insurance companies. Essentially, they are choosing where their compensation and new patients come from. Whether it is with the insurance companies' assistance, internal patient referrals, or a combination of both, it is still their choice.

All insurance environments have their advantages and disadvantages. Regardless of your practice environment,you must acknowledge your relationship with the insurance industry. Whether you have an insurance dependent, independent, or hybrid practice, this relationship will be crucial to the success of your business.

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