Managed Care Exit Strategies

Oct. 1, 2000
Don`t make a wrong turn! Examine all options before before participating in - or opting out of - managed-care plans.

Don`t make a wrong turn! Examine all options before before participating in - or opting out of - managed-care plans.

Tom M. Limoli, DDS &

David M. Reznik, DDS

Many dentists sign up for managed-care plans with the wrong expectations. They may fear, for example, that they are going to lose patients to managed-care plans in their area. Perhaps they have heard rumors of local employers offering managed care to their employees; they may want to be first on the block and gain a market share advantage.

Whatever the rationale, the only reason to sign up for a managed-care plan is to enhance bottom-line performance and overall dollar profit. Simply adding more patients to any practice will not enhance bottom-line profit unless the practice is ready, willing, and able to cope with the ramifications.

Any poorly run fee-for-service practice that adds managed-care patients is doomed to failure sooner rather than later. Based on our personal experiences, here are a few issues to consider:

- Do not expect patients to understand how a managed-care plan works. Patients are frequently told by their employers that everything is "free!" Since they have been preconditioned to expect no additional cost, patients may be unwilling to ante up a co-payment for procedures. First and foremost, they want what is "free."

- Do not expect increased bottom-line performance unless the practice is already good at providing enhanced services. Contemporary dental treatments like laminates, cosmetic bonding, sealants, adult fluoride, home-care products, and TMJ therapy are typically noncovered services. These fees for these treatments are due at the time they are rendered, are essential to the overall practice revenue mix - especially when managed-care programs are added.

- Do not change diagnostics, treatment planning, or priority sequencing. Continue to do them by the book. Pain, bleeding, swelling, and infection take precedence. After that, it would be prudent to expect the patient to invest time in home care before investing professional dental chair time in rehabilitation. Remember, managed care is taking care of a population of patients over time. Employer/insurance company contracts are typically 12, 24, or even 36 months, so time is an issue. For any managed-care program to work, the effective dates of the contract must be fully understood. Check the plan documents before accepting patients into the practice.

- Do not expect ordinary office communication skills to suffice. Good communication is an art form that both clinical and business staff should master. Like martial arts, this verbal judo should be neither offensive nor defensive but explanatory in nature. In all areas of the practice, with or without managed care, communication skills are the front-line assurance in maintaining appropriate patient care and practice performance.

- Do not expect the dental team to readily embrace managed care. They will become busier than ever when normally empty chair hours are filled with patients. After all, the reason for signing on was to fill unused chair hours. If there are no empty chair hours within your practice, and no way possible to expand hours, why sign up?

In a managed-care environment, every staff member must perform at maximum potential. This means chairside assistants must take responsibility for all radiographs, oral hygiene instruction, temporaries, charting, and documentation. Hygienists should collect data and perform all nonsurgical periodontal procedures. Business agents should adopt an ownership attitude toward running the practice. Treatment coordinators have an essential role in presenting treatment plans and coordinating financial arrangements. The doctor can then focus on performing only and exactly what state law requires.

- Do not expect the collections process to differ with managed-care patients. If the practice is not adept at up-front collections, the cash flow situation will deteriorate. Under managed care, all scheduled co-payment procedures should be collected prior to any treatment. This means no payment plans, no statements, and no collection calls. Payment plans should be allowed only for fee-for-service procedures. Call on any plastic surgeon`s office for an efficient example of how this can be accomplished. Furthermore, explaining the collection procedure in advance eliminates the need for excuses later.

- Do not expect the current practice management system (software) to accommodate the additional paperwork and responsibilities of managed-care programs. There are encounter forms, eligibility lists, transfer forms, specialty referrals, tracking systems, and data analysis. Without good data it is impossible to negotiate a more favorable contract the following year. Comparing managed care income to what would have been fee-for-service income is a flawed concept. It`s risky to assume that your office fee schedule and office utilization factors are correct in their relative values and will withstand the scrutiny of more than a quarter of a century of insurance company data. Nor will managed-care administrators have any interest in the value of fees on a practice-by-practice basis. It is important to remember the critical resources that contribute to profit in a managed-care environment: Chair utilization, office efficiencies, enhanced treatment acceptance, patient compliance, and time.

- Do not expect managed-care patients to refer fee-for-service patients. Managed-care patients typically refer more managed-care patients; they often have the mistaken belief that the practice is owned and operated by the insurance company!

Obtaining fee-for-service patients requires all members of the office team to remember that happy, satisfied patients will refer other patients - those who may not have a dentist, and possibly fee-for-service patients. In any case, all patients should be informed: "While this practice does assist our patients with many types of insurance, all patients are welcome."

While there are other considerations, we believe these issues must first be thoroughly examined and understood before taking on or deleting any contract programs. A practice adept at handling managed care might do well with the increased patient flow, with the acceptance of "enhanced" treatments, and an overall increase in bottom line performance.

In many cases, however, managed-care treatment allowances and reimbursements have not lived up to our client`s needs as promised. Some of our clients are asking how to reduce participation or totally eliminate managed care from their practices.

Rarely do we recommend the immediate cancellation of all plans. We do recommend a thorough analysis of all plans compared to plans of similar structure - PPO plans to PPO plans and DHMO plans to DHMO plans. An ongoing, six-to-nine month "bottom-line" profitability analysis is an absolute must for all managed-care programs! Clients who incorporate a modicum of managed care into their practice have a process of evaluating plans and re-negotiating or deleting plans that continue to be "nonprofit" entities. (For special bulletins on these evaluation strategies call our office or visit our web site at These bulletins are free to our clients.)

Before indiscriminately axing all managed care programs, think the process through from start to finish. You may have plans to eliminate your participation, but remember that not all plans are created equal.

First, revisit why you signed up for managed care in the first place. Was it to increase your bottom line performance? If so, consider the financial remuneration of each plan. Don`t make the mistake of looking at what you would have received if all procedures were converted to fee-for-service. That process does not work. For DHMO plans, use the "relative value" analysis. It is the only way to take "utilization" into consideration. Remember, fee values are very different from relative values; in capitation programs, everything is related to minute stime values. Compare PPO fees to your UCR Area Fees at or near the 90th percentile by having your current office fees professionally analyzed. Note: Don`t simply use the analysis numbers from the managed care company. Instead, use your office database to compare oranges to oranges.

Second, consider your current patient base and new patient flow plan by plan. Do you simply want to stop the new patient flow, or get rid of all patients in a specific plan, or all patients in all plans?

Third, look at your "upgrade" numbers. These are the procedures you provide at fee-for-service because they are not covered by the plan. Examples include fixed versus removable prosthetics, resin versus amalgam restorations, and all cosmetic procedures. Some plans have contract language that prohibit "upgrading" Get rid of these plans now! If a patient wants excellence in dental care that is in his or her best interest, and is willing to pay for it,. no contract should prohibit this process.

Finally, with the help of your administrative team, evaluate the administrative ease of each plan. Consider such things as toll-free access lines for verification, response to questions concerning different plans, office team training, electronic data transmission, ease of processing supplemental claims payments, response time, and patient education concerning the plan.

If, after this process, elimination of one or more plans becomes necessary, follow this process:

- Review what the contract specifies in respect to notice of cancellation. (Usually 30, 60, or 90 days.) Remember, you are dealing with contract issues; you might do well to have your action plan reviewed by your attorney.

- Check the contract for language that may control or limit your communication with patients assigned to your office. For example. are you restrained from sending a letter of notice to your patients of record covered by this contract?

- We suggest sending a letter to all patients of record enrolled in this specific program notifying them of your decision to no longer maintain your relationship with this specific carrier contract. ( See the sample letter on page XX.)

- Do not send a blanket letter stating "We are getting out of all managed care programs." Be specific by carrier and in some cases by the group itself. Yes, in some cases you may wish to keep the XYZ company and drop all other employers covered by this carrier. Again, check the contract language to see if this is permissible.

- Do not wait for the carrier or administrator to "approve" your letter. Once you have notified the carrier or administrator that your office will no longer provide care to new (or all) patients in this plan, get your letter out to the patients as soon as possible per the contract language.

While the emotional impact of managed care remains high, it is wise to remember that cooler minds must prevail. The decision to delete some or all managed care can only be made after a thorough analysis of the how numbers affect the individual practice. Armed with the correct and accurate information, practitioners can make a rational business decision that applies to both patient care and practice success.

Atlanta Dental Consultants, Inc. and Limoli and Associates make no attempt to offer legal or accounting information. This discussion is for intellectual purposes only.

(c)2000 Atlanta Dental Consultants, Inc. This information has been reprinted from previous or soon to be released publications.

A sample plan cancellation letter

Dear : ( Mail merge by name)

It is a pleasure to have you as a patient in our practice. Due to many issues beyond our control we will no longer participate in the ( be specific) Dental Program. Our relationship with _____________ will end on ( date as specified in the contract ). Until that time, we will complete any treatment already underway and assist you with palliative (emergency) care for an additional 30 days.

You will be pleased to know that you will remain our patient of and your original records will be kept in our file. A copy of your record is available upon your written request for a duplication fee of $_____ per page and radiographs at 20 percent of our office`s usual and customary fee. (Again, check the contract language for this provision.)

You do have the option of remaining in our practice for all your dental needs as a fee-for-service patient. Our insurance coordinator, (specific by name), will be happy to assist you with arrangements to get the maximum benefit possible from the dental program of your choice. Contact our office to discuss these alternative arrangements.

We appreciate the trust you place in our practice, and we want to be the dental office of choice for you, your family and your friends for many years to come.


Your dental team