PPO 101
Sometimes we get calls from new dental school graduates or dentists getting ready to buy their first practice and they have questions about how PPOs work. Insurance seems to have a language of it’s own and if you are looking to get learn the jargon, here’s the basics:
When you are In-Network with a PPO you are considered a “Preferred Provider” with them. You sign a contract stating that you agree to a specified fee schedule which is lower than your regular fees. In exchange for the discount, the insurance company promotes your practice by listing you as a Provider with their customers (your potential patients). You will be subject to reimbursement based upon the rules of the plan including a yearly maximum of benefits, potential waiting period on some services and frequency limitations. Depending on the state you practice in and the type of policy involved, many insurance companies require the dentist to adhere to the negotiated fee even if it pertains to a non-covered service or the patient’s yearly maximum has already been paid out. This is important for procedures such as veneers, implants or ortho because the policy may exclude coverage but will still prohibit you from charging the patient your regular fee. It is important that you know which procedure codes your office utilizes the most as those are the fees you will assign most priority during fee negotiations.
Assignment of Benefit means that the patient has agreed to have their benefit check sent directly to your office and you, as the dentist, agree to accept their benefits from the insurance company. If you are a Preferred Provider, the insurance company will automatically send you the check. If you are not a Preferred Provider, most insurance companies will still allow you to accept AOB even on an Out-Of-Network basis. Patients often prefer this option because the dentists waits for the insurance check rather than the patient.
If you choose not to become a Preferred Provider yet provide services for a patient utilizing their benefits, that insurance company will consider you to be an Out-Of-Network Provider. As an OON provider you will bill your full fee to the insurance company and they will pay their designated percentage based on UCR (Usual and Customary). UCR is considered the maximum allowable charge the insurance company will consider for a service. So even if there is 100% coverage on a code, they will still pay up to a particular amount which is their designated UCR. Be aware that UCR is different depending on your area and each insurance company. Some employers also choose a higher UCR level when purchasing an upgraded plan so even with the same insurance company you may see different UCRs depending on the policy. When your fee exceeds the insurance company’s UCR you may then bill the patient for the difference between UCR and your fee. This is another area we examine with our services as we want your practice to fall close to UCR with the procedure codes that matter the most.
In a totally Fee-For-Service practice, the dentist chooses to collect payment in full from the patient at the time of service. The patient then submits a claim form to the insurance company and the insurance company pays any due benefits directly to the patient. The dentist is paid directly from the patient, not the insurance company.
There are benefits and restrictions with all models of practicing dentistry. To see a quick pro and con listing visit our PPO vs Non-PPO page.
Choices
How do some practices make PPOs work better than others? Much of it boils down to choices regarding practice style. A typical solo dentist who takes PPOs usually does so to keep cash flow rolling until the schedule gets busy and then other options can be considered. When the practice has been built to a level where the schedule is consistently full, this is where choices become more individualized.
Building a PPO Practice
The dentists who have busy PPO practices grow by making good business decisions about how they manage their overhead and patient flow. When the schedule gets full they recognize that they can increase capacity in a variety of ways. Rent stays the same each month so utilizing the office from 7am to 7pm means that a PPO patient can be seen more profitably because existing space is being managed more efficiently. Practices looking to grow in this way also consider adding a partner or associate to increase capacity and create good systems to maximize their staff and facility. Some increase productivity by utilizing expanded duties staff to delegate duties. I know many dentists who provide quality care to their patients with this model by being efficient and smart about overhead but you must recognize that high write offs require you to manage well and have proper systems in place.
The Other Direction
When the schedule becomes full, the decision can be made instead to decrease insurance participation rather than add additional capacity and/or staff. Dentists who make this decision typically do not want to deal with insurance any more than they have to, prefer to not to increase their hours or do not want to add a partner. They recognize that there are ways to continue seeing more patients and be profitable but the practice style required to achieve these results is not the way they want to practice. They find dentistry more enjoyable by having fewer insurance restrictions, keeping a smaller staff and usually less administrative work. These dentists prefer to gradually move towards independence from insurance as patient flow allows.
Our goal isn’t to persuade anyone about which type of practice to pursue. Dentistry can be enjoyable and profitable with a variety of practice styles. If your preference is to gradually move away from insurance participation, you will find our services provide you with the tools to make that decision a reality.
