Dental Insurance 101
Welcome to Dental Insurance 101. New practice owners can lay awake at night struggling with their decision to remain fee-for-service, join PPO plans, or know which PPO plans to select. There is increasing pressure to join PPO plans as many patients will find their insurance is tied to a PPO option through their employer. In fact, according to Practice Booster, nearly 90% of all plans sold to employers are PPO plans. Bear in mind, PPO plans are not the only insurance option. Please read the Dental Insurance FAQs to understand the basics of other plans.
As a new practice, you can expect holes in your schedule to start. To combat this, plan an aggressive marketing strategy. One form of marketing is joining a PPO plan. Some new practices plan to join every PPO plan in the community initially, intending to drop them as they get busier. This is not always the best option as we find the practice will lose approximately 50% of their PPO participants after dropping a plan. Instead, do your research:
- Determine large employers in your area and know their contracted insurance carriers.
- Carefully negotiate fee contracts – don’t accept the first offer.
- Read contracts thoroughly.
- Create referral-worthy experiences for your patients to promote internal referrals for your fee-for-service patient base.
- Consider an in-house dental savings plan (also called an in-house membership or wellness plan) to limit your dependence on third-party payers. Laws regarding in-house plans vary widely among states; consult with your state dental board and insurance commissioner for state-specific regulations.
Joining a PPO plan as an in-network provider will reduce your profitability. To maintain the same profit you would have under a fee-for-service model in a PPO plan, you would need to work efficiently and see more patients. A common mistake is to try to create a boutique experience under a PPO business model. However, PPO participation often provides access to new patients that may not be found otherwise.
Creating a fee-for-service practice where you are willing to process insurance claims on behalf of your patients is another business model. You will be processing claims as an out-of-network provider. In-network providers have access to each patient’s dental benefit breakdown. This helps determine an accurate out-of-pocket expense when providing estimates. Out-of-network providers do not have access to those benefit breakdowns. This requires a front office team to be well versed in explaining estimates and potential out-of-pocket expenses for treatment. Large cases can be pre-determined with a wait-time for the patient.
If you choose to participate, plan to negotiate your fee schedule well. Many providers assume the first schedule is the only option. While this is true with some providers, like Delta Dental and Premera, it is certainly not the case with others. Set your office fees in the 75th – 80th percentile for your zip code and carefully read our PPO negotiation steps before soliciting fee schedule proposals.
Network Share Arrangements
Almost every PPO plan has an agreement to share their fee schedule through network share arrangements with other insurance companies. For example, if you sign up with Aetna as a PPO provider, you are also contracted with Lincoln Financial and Guardian – unless you opt-out. Carriers in your area may network share with other insurance providers. Many of these contracts assume you agree to these terms unless you write a letter stating otherwise. Some plans obligate you to participate in their PPO plan and DPPO plan; read your contract carefully to understand the exposure.
Read your contract proposal carefully to uncover restrictions and limitations. There are times a service may be covered with a fee attached but limit many of your patients from receiving the benefit. This is often the case with occlusal guards, fluoride treatments, and missing tooth clauses.
If your practice is in a state with non-covered benefit laws, you will be able to pass on some fees to your patients for services not covered in the plan documents. This is often the case for cosmetic services. You can opt to honor the PPO fee or pass on your full-service fee (depending on your state and coverage laws). Check with your state dental board for laws relating to non-covered benefits.
The ADA and some private negotiation services can help you negotiate fees and determine which plans are best for you. Burkhart’s Practice Support Team offers a complimentary PPO Analysis determining overall adjustments for each plan you are considering.
Much of your negotiation leverage is determined by the saturation of the plan in your area. If a carrier is moving into an area and offers plans for sale to local employers, they are more likely to want to build a network of providers to sell their plan. If they have a large network already, your bargaining power is reduced.