2007 Fee Survey

Sept. 1, 2007
It has been said time and again that there are only three rules needed to successfully profit in real estate: location, location, location!

For a copy of the 2007 DE Fee Survey charts, go to http://www.dentaleconomics.com/downloads/

by Tom Limoli, Jr.

It has been said time and again that there are only three rules needed to successfully profit in real estate: location, location, location! The same can be said for financial investing, only those three rules are: diversify, diversify, diversify. Similarly, the three rules of dental benefit plan interpretation are: the contract, the contract, the contract.

Dental benefit plans come in all different shapes, sizes, and flavors. The primary controlled variable in dental plan design is the amount of dollars invested to purchase and administer the plan - the higher the premium, the better the reimbursement generated by the plan. More costly benefit plans generally reimburse at the true 90th percentile of submitted fees, while more cost-effective plan designs may reimburse at 65 to 80 percent of the 75th percentile. Then there are nontraditional benefit plans, which reimburse based on time, not procedure.

So why is there continuing confusion concerning fees and fee scheduling? Do we think our fees are unreasonable? Do we fear giving away the store? Are we concerned that our patients will receive that dreaded letter from the insurance company informing them that our fees are too high? Or, do we simply want the most reasonable reimbursement for the service that we perform?

This issue of DE® is the annual fee survey. It is my honor to again be of service to both the reader and profession of dentistry by sharing our expertise as well as our data. After you study our fee data, you will be well armed with the information you need to create and update a specific fee schedule that is appropriate for your office and the patients you serve. Remember, we are not telling you how to practice or what your fees should be - we are simply telling you that properly interrelated fees will produce a fee schedule that is balanced, profitable, and acceptable to your patients.

Your fee schedule is the most important tool for generating income to offset the costs of doing business. The primary goal of any well-managed business is to show both profit and growth. Only the government needs simply to stay busy! The profit should be built into the fee to allow for ongoing practice growth and retirement for both doctors and team members.

What do the columns represent?

Closely examine the format of our fee survey. The most commonly reported procedure codes are listed vertically on the left side of the page. Following each procedure code are seven columns of numbers. The first five columns represent fee data based on “Lower,” “Low,” “Medium,” “High” and “Higher.” The data progress in value from the lower columns on the left to the higher columns on the right. Note that within some rows, the fee to the right of a given column may be lower than the fee to the left. This is not a misprint; it represents an average of the fee reported to us for that particular procedure code. This data is based on 100 percent of the 90th percentile.

Column 6 represents the national average of the fee charged for the procedure. This number is an average that is derived from our entire database, not simply from the previous five columns. The national relative value provided in column seven is similarly derived from our entire database, not the first five columns of data.

Each dental office should maintain its own template of Relative Value Units (RVU). RVUs are simply weighted values for professional services that represent the overall complexity of delivering the service. In dentistry, the basic factor used to measure differences among the values of coded procedures is time-supplemented by additional factors such as skill and overhead costs. The starting point for maintaining your system of RVUs is to assign a value of “1” to Code D0120 (periodic oral evaluation) because it is the most frequently performed and reported procedure code. All other fees then become related to this base RVU. If a procedure has a value of “2,” its fee should be twice the value of “1,” or twice the fee.

Unlike the federal government’s Medicare reimbursement tables that utilize a conversion factor, modifier, or uncontrolled variable to establish a specific dollar amount of reimbursement, our system utilizes the value of the periodic exam as an interrelationship tool.

Establishing a fee schedule

Establishing a fee schedule is a painstaking process which requires thoughtful consideration of personal and professional needs. After the schedule has been established, however, it is a relatively simple task to periodically evaluate and update it.

Dentists use a variety of methods to establish their fee schedules. Some base their fees on what the dentist down the street charges, others use the tables of allowances of indemnity plans, and still others base their fees on the inherent costs of procedures. I believe, however, that it is more efficient to first determine the length of time required to perform a procedure then add lab fees, supply costs, and exposure to financial and professional risk factors into the equation to create the actual fee. As you will see in the information that follows, a relationship can be established among your individual fees. This relationship will make your task simpler in two ways:

• It will facilitate periodic review and revision of your fee schedule.
• If a portion of your practice is involved in managed care - or if you are considering managed-care involvement at a later date - it will enable you to better evaluate contracts offered by managed-care organizations.

How to charge

As you know, there is no code that provides separate reimbursement for federally mandated infection-control procedures. There is no need for you to add a separate charge. Sterility is not a separate procedure; it is part of the cost of doing business.

The interrelationship of fees is critical. For example, we stress the equal relative value of the two-surface amalgam (D2150) and the importance that it equals the fee of a one-surface composite (D2330). With this data, we’re not telling you how to practice or what your fees should be. We are telling you that properly interrelated fees will produce a fee schedule that is both balanced and profitable.

Your fees need to be reasonable. Once you have established a viable and realistic fee schedule, you shouldn’t deviate from it unless an individual patient presents with unusual complications. Of course, it is always within the professional’s domain to increase fees when the situation involves more than typical complications and/or problems. Most benefit plan consultants are allowed to increase the appropriate reimbursement for any coded procedure up to a range of $100 or 25 percent when an acceptable narrative with a short description of the complication is submitted.

It is unacceptable for the dental office to have a range of fees for an individual procedure. A fee that ranges from $50 to $70 will most frequently be accepted at $50 and questioned at $70. It would be far more professional and appropriate to list $60 for the procedure and add 20 percent, 50 percent, or 100 percent when an unforeseen complication occurs. Of course, you must inform the patient about any such complication and describe it within both the clinical record and the benefit claim.

Define your terms

Both the legal profession and the dental community seem to have an infatuation regarding fees and fee schedules. To shed light on this very gray and confusing subject, let’s address several standard definitions that you may or may not have in your working vocabulary.

Your office has only one fee schedule that lists the usual fee for each procedure that you perform. State dental boards and other regulatory authorities frown on doctors that have multiple fee schedules (i.e., one for insured and one for noninsured patients).

The usual fee is the fee that appears in your office fee schedule. The usual fee is defined as that amount of money which you charge in the open, free-market economy. It represents your full fee and has nothing to do with the amount of money contractually reimbursed by the patient’s benefit plan. This is simply your baseline standard.

Benefit plan administrators statistically establish customary fee levels. These levels are established based upon the dollar amounts and frequencies of a specific dollar amount submitted on claims to the benefit plan or administrative entity. One hundred claims for $30 each has more weight than 10 claims for $40 each. The more times the event occurs, the more customary it becomes. Fee data are most often grouped into frequency percentiles.

In an insurance-free, fee-for-service environment, doctors charge whatever they feel is appropriate. When a dental office modifies its usual fee, it is most often identified as simply being a reasonable fee. Fees are and can be modified for any number of reasons - for example, charging more for a prophy due to a patient’s previous neglect or charging less for a pediatric extraction.

It is not an unreasonable action when a benefit plan contractually does not honor the doctor’s modified usual fee, just as it is not unreasonable to deny a child chocolate ice cream for breakfast.

Your office may participate in various benefit plans and have several different tables of allowance. These are based on contractually agreed-upon dental plans in which the practitioner is identified as a preferred or designated provider. The amounts identified in a table of allowance are not to be confused with fees. The dollar amounts identified in a table of allowance are nothing more than a representation of the total dollar obligation on the part of the plan. It has nothing to do with your usual fee or what you charge.

Both participatory and nonparticipatory benefit plans may reimburse for specific services based on a maximum allowance. These plans generally reimburse up to 100 percent of a predefined dollar amount. The dollar amount of reimbursement is based upon the financial strength of the plan as defined by the contract with the purchaser -- not the insurance company. The difference between that pre-defined level of reimbursement and your usual fee is to be paid by the patient in a true fee-for-service environment.

Plan reimbursement based upon maximum allowances should not be confused with the surcharges paid by the patient under a maximum fee schedule plan. Surcharges apply only to those patients who are participating in specific - most frequently prepaid - benefit plans. The differences between maximum fee schedule and maximum allowance plans are primarily the levels of financial participation on the part of the patient. With both plans, your usual fee is not taken into consideration by the plan. With maximum allowances, the patient is responsible to your office for your full usual fee. Participating dentists cannot collect their full usual fee from patients covered by maximum fee schedule plans.

Remember the words of the great dental philosophers from Chicago: “The patient is responsible for the total cost of dental care.”

Our average dentist in the USA

The sample fee survey represents 100 percent of the 90th percentile, calculated by distribution, using actual fees from across the country within a fee-for-service dentistry model. These data do not represent benefit plan reimbursement tables or schedules. The data was created from submitted benefit claims as well as fee schedules submitted to www.limoli.com for analysis.

Each coded procedure has been carefully evaluated, first by its ADA nomenclature category - i.e., examination codes with their fees, restorative codes with their fees, etc. The last column represents the relative values that my firm, Atlanta Dental Consultants, has created. These are provided to assist each private practice dentist in realizing the interrelated mathematical values of various codes and fees, taking into consideration the many factors discussed in this article.

I hope you now realize how important it is to understand the meaning of the word “fee.” This is the first step in eliminating the confusion created by the various uses of terminology and the methods of calculating maximum allowable benefits and fixed surcharges. Only by comprehending this all-important facet of dental practice can dentists hope to protect as well as validate their individual office fees.

How can you best utilize this data?

Take your existing office fee schedule and compare it with the five columns of fee data in the charts that follow. Identify which column most accurately represents your existing office fee schedule by identifying your individual, unrestricted office fee for each listed procedure. Your goal is to have all listed procedures fall within one or two consecutive columns. At Atlanta Dental Consultants, I have compiled and copyrighted this fee-data analysis process, along with our system of relative value. It is for your individual office use and is not to be shared with others in an anti-competitive manner.

The data in our survey offers every dental office a reasonable foundation to measure the appropriateness of a fee for a coded procedure. The third-party carrier may be willing to participate in such payments, but all patients must be willing to accept fair fees, regardless of any or no third-party coverage. They also must be willing to be responsible for the full amount per coded procedure.

Please take careful note of the various columns and be prepared to use them in a vertical, as well as a horizontal, direction. If you feel that your crown and bridge single or multiple units are not quoted high enough because of the peculiarities of your office, laboratory bill, or costs of operation, please do not hesitate to consider the next progressive column(s). If you find your preventive care is not adequately compensated for in a column that otherwise meets your upcoming fee criteria, then do not hesitate to move laterally and use a less expensive fee for a prophylaxis, radiography, etc. These guidelines are for your use. Once you establish that the specific data furnished is comfortable for your practice, then it may be fine-tuned to become your office fee schedule.

Why relative value rather than geographic region?

Let me tell you a story about fees and individual dentists here in Atlanta. My father, Tom Limoli, DDS (1924-2006), had his multi-specialty dental office located in the high-rent district of Atlanta in a section known locally as Buckhead. Some of the finest shopping and dining establishments in the entire Southeast are to this day located within walking distance of Dad’s former waiting room. As a very young child, I wondered why my parents took lunches with them to the office. It wasn’t until years later that I learned the reality of my parents’ action. You see, the most reasonably priced ham and cheese sandwich within walking distance of the office cost $13 and was served with imported potato chips.

Saks Fifth Avenue and Neiman Marcus were all within walking distance. The regional offices of Blue Cross / Blue Shield were right around the corner.

Less than four miles from my father’s former practice is the office of one of America’s most famous dentists. He is a successful and well-respected clinician whose client base includes politicians, heads of state, and foreign dignitaries, as well as famous actors.

Legend has it that four incisor jacket crowns (D2740) may cost $3,500 each in this most famous of dental offices. Dad’s fee for this same service was $1,200 each, while my father’s younger associate charged as little as $750 per unit.

If you were to walk a line connecting the two offices I just mentioned, you would surely pass the parking lot of one of the largest denture mills in the Southeast. On the second Tuesday of every month, a patient can get a full upper or lower denture with up to five simple extractions for the whopping low price of $450. If it’s not the second Tuesday of the month, simple extractions are an additional $20 each, with or without coupons.

I share this story with you because these offices are all within the same zip code area.

Most third-party payers would profile the offices and fees separately; some would not. Sometimes specialists are reimbursed more than general dentists; sometimes they are not. Dental reimbursement plans are as different and unique as the patients treated in the above-mentioned three dental offices.

My point is this: A fee is a fee because it’s a fee. It becomes your fee when your patient is willing and able to pay it and you accept it as payment in full for your professional services and time. Your patients must understand that they are expected to financially participate in the cost of their dental care.

Please do not trap yourself by attempting to establish your office fee schedule based on what some third-party payer reimburses at 65 percent of the 85th percentile. And don’t establish your fees based on the dentist down the hall or across the street. Your fees should be based on your overhead, expenses, patient base, and individual level of professional expertise.

Tom Limoli Jr. is the president of Atlanta Dental Consultants and the author of “Dental Insurance and Reimbursement Coding and Claim Submission.” A Comprehensive Fee Schedule Analysis is available for individuals as well as group practices from Atlanta Dental Consultants / Limoli and Associates. Visit www.limoli.com or call (800) 344-2633 for more information.


HELPFUL DEFINITIONS

Usual Fee - The fee that an individual dentist most frequently charges for a given dental service.

Fee Schedule - A list of the charges established or agreed to by a dentist for a specific dental service.

Reasonable Fee - The fee charged by a dentist for a specific dental procedure that has been modified by the nature and severity of the condition being treated and by any medical or dental complication or unusual circumstances, and therefore may differ from the dentist’s “usual” fee or the benefit administrator’s “customary” fee.

Customary Fee - The fee level determined by the administrator of a dental benefits plan from actual submitted fees for a specific dental procedure to establish the maximum benefit payable under a given plan for that procedure.

Table Of Allowances - A list of covered services with an assigned dollar amount that represents the total obligation of the plan with respect to payment for such services, but does not necessarily represent the dentist’s full fee for that service.

Maximum Allowance - The maximum dollar amount a dental program will pay toward the cost of a dental service as specified in the program’s provision.

Maximum Fee Schedule - A compensation arrangement in which a participating dentist agrees to accept a prescribed sum as the total fee for one or more covered services.

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