How I dropped a PPO, without losing a patient

May 1, 1999
I have never been a fan of discounts offered to only one segment of a patient base. Aside from the logistical impossibility of providing the highest level of care at a low fee, I have an ethical problem with this practice. Is it fair that patients with no dental benefit plan pay full fee, while fees for patients of a managed-care plan are lower? What would a third-party administrator think if my uninsured patients routinely were offered lower fees than those I bill to that company?

Long-term strategies for success sometimes call for an entire new game plan.

John J. Maggio, DDS

I have never been a fan of discounts offered to only one segment of a patient base. Aside from the logistical impossibility of providing the highest level of care at a low fee, I have an ethical problem with this practice. Is it fair that patients with no dental benefit plan pay full fee, while fees for patients of a managed-care plan are lower? What would a third-party administrator think if my uninsured patients routinely were offered lower fees than those I bill to that company?

I, like many Americans, feel uneasy having to haggle for the price of an automobile, wondering every day that I drive the car if others on the road received a better deal. I think it unfair that two individuals sitting next to each other on an airplane, or rooming next door to each other in a hotel, might very well have paid widely disparate rates. Somehow, I think professionals must stand apart form the rest of the capitalistic world and avoid these marketing tactics, which are becoming commonplace.

Much has been written and said about managed-care plans and various philosophies relating to them. I reached a point recently where I felt I had to stop philosophizing and do something positive in response to an unattractive trend I was witnessing in my private practice.

The dentist from whom I purchased my practice participated in a managed-care plan. The former owner strongly suggested that I become a participating provider to avoid the loss of patients. She stated that this was the only plan that she had seriously ever considered incorporating into the practice. At the time of my transition into the practice, the fees that this preferred-provider plan was allowing were very close to this dentist`s fees. In fact, I knew many dentists who spoke highly of this specific plan. Some did not even consider it a managed-care plan, as the fees were "not so bad" and the company was very courteous and expedient in processing claims. I decided to try to work with this plan.

It took about a year before I started noticing symptoms that this plan might not be in the best interests of my practice and my patients. As the costs and fees to all other patients were rising steadily, this plan had stagnated. Plan representatives kept promising that a fee increase was imminent, but it never arrived. Actually, since its introduction into the market, that plan had never implemented a fee increase. I analyzed the plan`s fee schedule and found I was discounting my fees by anywhere from 10 percent to almost 50 percent.

There also were some peculiarities in the fee schedule that could not be explained. Maxillary complete dentures did not share the same fee as their mandibular counterparts. Posterior composites were reimbursed at only a slightly higher rate than the corresponding amalgams. A significantly lower fee was imposed for pontics than for the abutments retaining them. A higher fee was allowed for a porcelain-fused-to-metal crown than for a bonded, all-porcelain crown or a full-cast noble crown. I began to feel pressure when planning treatment for patients of this plan, and I was concerned that the inappropriate fees imposed on me might eventually affect my treatment recommendations.

I noticed more and more new patients coming into the practice simply because I was "on the list." This was disturbing. In a practice where my chief source of referrals always had been personal recommendations by existing patients, these patients had selected me to be their dentist strictly for the discount touted by the plan administrators. I had become the lowest bidder. Worse yet, many patients stated that they had left their dentist because he or she had refused to become a preferred provider. I was taking patients away from good, fee-for-service dentists in my community.

The specifics of the contract I signed were not conducive to good business management. As with most models of this type, I had to promise I would offer the same appointment hours my other patients enjoyed. I soon realized that I was severely discounting my profits to work my least favorite times, evenings and Saturdays, which were filling up months in advance. The middle of the day was becoming less busy.

I also was not contractually allowed to collect any portion of my discounted fee until the plan had paid its portion. I now had the collection problems that certainly would be expected when a statement is sent three months after a treatment is rendered for patients who were led to believe by their employers that they would never have any copay if they sought treatment from a preferred dentist.

I was breaking two cardinal rules that I taught dental students in my practice-management lectures. First, I always cautioned them not to begin treatment without a financial arrangement. This was impossible with the PPO, because we did not know what the patient`s responsibility would be. Second, I preached that courtesies and fee adjustments be made only on the condition that the fee be collected at or before the time of service, which was not possible under that PPO contract. This plan was beginning to perplex me.

Throughout this lengthy period, during which I closely observed this portion of my practice, I noticed repeated requests by these patients to be referred only to specialists who were plan providers. None of the specialists to whom I routinely referred were panel members. This created an ethical dilemma for me. I could not necessarily recommend individuals whom I did not know well. I also felt I was helping to reinforce and solidify the concept that preferred dentists should be approached in any case where treatment is needed.

The final blow came one morning when a colleague at our dental school told me that this plan allowed his full fees. He was not a preferred provider. Without having to ask about his fees, I could assume that they must be higher than the fees I was accepting. Could this be accurate? Could this plan actually reimburse a nonparticipating dentist more than a participating dentist?

The suspense was killing me. I called my representative at that company as soon as I arrived at the office the next morning. She verified that the plan had two fee tiers. One was a discounted schedule for the plan dentists, which she stated was based on the 50th percentile of dentists` fees for our geographic area. The other was a UCR fee for non-plan dentists, which supposedly was based on the 80th percentile of local fees.

I asked questions for clarification. "Are you saying that if I were not a participant, and a patient`s benefit were paid at 100 percent, you would pay my full fee, which is more than you currently are paying me?" "Well ... yes," was the reluctant response. I then asked how being a preferred provider would benefit me. I was told that I would receive more patients and have my claims preferentially expedited. I now knew what I had to do, but I first needed to do some research.

I found that approximately 10 percent of my active patients were members of this plan. More interesting were the names I saw on a printout of plan patients. Many of these patients had been patients of my practice before their insurance carrier had changed from an indemnity plan to this managed-care plan. These patients did not choose to see a plan dentist. They were continuing to see me, but I now was discounting my fees to them. I also noticed that my family members and other long-standing patients referred several patients to me. I proceeded to categorize this patient list as follows:

Patients who had not come into the office because of my affiliation with the plan were listed under "will not leave."

(1) Patients with whom I had built a successful, close relationship were listed as "probably will not leave."

(2) Patients I found hard to predict were assigned to the "might leave" list.

(3) Patients who had come to me because of my preferred status were listed as "most likely will leave."

Another big segment of this group did not meet my definition of an active patient, which is anyone who has seen my hygienist in the past 12 months. For these patients, I felt their decision was not significant enough to try to predict.

A critical step followed. I showed my list to my office manager to assess her commitment to this project. She had been very pessimistic, but I saw some support growing as she reviewed my predictions. I explained that we could lose 30 percent of these patients (since we were extending, on average, a 30 percent fee discount) without losing any production. We could afford to lose more patients, I argued, since so many of them preferred the evening and Saturday appointments, which we would have no problem scheduling with other patients.

My office manager was tentative, as she still doubted the accuracy of my contention that the plan`s reimbursements would be higher if we ceased to participate. To allay her concerns, I scheduled a meeting with several supervisors and administrators of that plan. They verified those details, but pointed out that only some of the plans operated on a percentage basis. Those employers who had opted for a fee schedule offered plans that paid a set fee regardless of the dentist`s fees, so these patients might have a significant difference to pay if I ceased to be a panel member.

I gave these plan representatives one last chance to allow me to charge my full fees to remain a plan participant. They were unable to oblige me and asked me to reconsider my decision, Within a week, I sent them my 60-day notice of termination.

I decided not to correspond by mail to the affected patients. I preferred to discuss this matter with each patient in person at his or her next scheduled appointment. My wife helped me write a script to explain this situation. Just before I began to implement it, I listened to a cassette newsletter recorded by Dr. Bill Blatchford. He suggested an almost identical verbal communication.

Here is what I told each of my plan patients:

"I need to talk to you about your insurance plan. I have changed my relationship with that company and I no longer will be featured on its list of preferred providers. This decision was necessary because the restrictions placed on me were threatening to alter the standards of care that we provide for all of our patients. We will continue to process insurance claims for you, and the company assures me that it will continue to send payments to me on your behalf. This change should result in an increase for you of only a few dollars per treatment. In fact, in some cases, the insurance company actually will pay a higher benefit now, without affecting your portion of the fee."

I made this presentation myself. I tried to keep the mood positive, and a short discussion generally followed. My staff members were briefed thoroughly, so that they could be supportive and help in answering questions posed to them. I found patients to be very understanding, even enthusiastic. Many patients interrupted me to exclaim something like, "I`m not changing dentists," or "I don`t come here because you`re on some list!"

It has been one year since I made this change. To date, I have not lost a single patient who is covered by this plan. I have not seen any decline in case acceptance. If anything, my relationships with these people have been strengthened.

Some important points must be made that were specific to my experience. This was an open panel. I do not expect that I would have been quite as successful had this been a closed plan, where reimbursements would have been cut off after my contract termination.

An additional plus may have been the plan`s willingness to assign benefits to nonparticipants, although assignment directly to the patient likely would not have been a significant obstacle.

Another advantage over traditional PPOs was this particular plan`s practice of paying nonparticipating dentists at a higher reimbursement level, although I think I overestimated the importance of this feature to my patients.

Remember, I was experiencing vacant slots in my appointment schedule at the time I decided to drop this plan. These are the same openings that taunt so many practitioners into joining plans. My elimination of the plan did not create more unscheduled time; it did increase production and profits. Naturally, new-patient referrals from the plan have all but disappeared, but I was prepared for that reality, and I certainly prefer full-fee referrals.

I was much more successful than I would ever have imagined in freeing myself from an increasingly menacing managed-care plan. Of worthy note is the fact that this was deemed to be one of the better plans. One only can imagine the dramatic effects of dumping a plan that is less attractive.