When you enter into a contract with an insurance company, you want to know when you will have the opportunity to rework your fees before the contract ends and have more say in setting reasonable and fair rates.
Well, the short answer is yes! You can negotiate PPO dental insurance fees. But, of course, there is a longer answer too.
In this article, I'll share the best strategies to use when negotiating your PPO dental fee schedule with insurance companies. With these strategies, you can approach insurance companies prepared and confident in your ability to renegotiate more favorable PPO contract fees. Not only will your practice make more money, but it will also give your team more control over your income.
Prepare to negotiate your PPO insurance fees
I always encourage dental teams to negotiate their fees. It can never hurt to ask, especially if your payment rate is more than 20% lower than that of your regular fees.
You'll first have to request to negotiate your PPO insurance fees. According to this Burkhart Dental Supply article, you'll likely end up with more favorable fees if the dentist initiates the negotiation.
As with every negotiation, you can't go in unprepared. You need to do your homework before you discuss your request with the provider relations department. This means you need to gather some data on your dental practice and the PPO plan details.
Most of the reports you'll need are in your practice management software. Presenting raw data and previous fees to the insurance company will give you an advantage in this negotiation. And knowing what you're talking about will help you fight for the fees you deserve.
Bring facts and reports to the table
Run your practice management software reports to determine the average net production generated per new patient to determine your new patient value. To do this, divide the total amount of net production on new patients seen in the 12-month period by the number of new patients seen during that same period.
You should also print your current practice ADA/fee schedule list to run a fee analysis that compares the current full fee schedule with the proposed PPO fee schedule. You can then print a report that shows the collections for each insurance carrier involved in the PPO plan over the last 12 months.
After you determine the percentage on average you are writing off, then calculate the potential loss if you join the PPO plan instead of fee-for-service plans. Most practice management software programs can report the amount of revenue collected by each insurance company in your database.
You can then determine what your in-network collected amount will be based on the percentage of your fee they allow. This information is useful for your negotiation of the highest reimbursement amount possible. Consider your options, and present the data to the insurance company.
Finally, review your annual or semiannual profit and loss statement to determine what your break-even point is and your overhead percentage. Most general practices will have an overhead of 50% to 65%, although this percentage may be even greater after the COVID-19 pandemic.
The average profit is typically about 35%. That means that for every $1 you earn, 65¢ is taken for all the costs involved (your fixed and variable expenses). That percentage doesn't even include owner's compensation.
Present your research to the insurance company
Let's get into negotiating. First, if you see that your write-off is higher than you can financially afford, let the insurance company know the specific codes they need to improve to keep your numbers under a 20% insurance write-off.
You may have signed a contract or nondisclosure agreement with your PPO plan and most likely are prohibited from sharing that info with anyone outside your employee list. If you contractually agreed to keep your fee schedule private with a nondisclosure agreement, you cannot share this information with other insurance carriers. Keep this in mind.
Now let's suppose that the insurance company proposes a plan to you. If the proposed plan write-off percentage is too high, you need to determine if you can financially afford that cut in income.
If you are at a 35% profit margin and you are writing off more than 20% of your fee, your profit is low, and there is little money left to reimburse the practice needs or the owner's compensation. This is where the data you have gathered come into play.
We have seen cases where the write-off is 40% and the practice has cash flow issues. A practice must develop effective systems to keep overhead as low as possible as well as the schedule as full as possible to maintain profitability.
If you present how the proposed fees will not work for your practice financially, the insurer will be more likely to negotiate a fairer fee. Stating the facts in a calm, nice manner greatly improves your chances of renegotiation.
Most contracts require you to bill your full fee. If you submit the reduced fee, you will rarely get a fee increase from the PPO. If you have been incorrectly billing your reduced fee, then you should also bring it up to the insurance company.
Your statements, treatment plans, and walkout slips should always show the in-network savings. The patients will appreciate the PPO contractual write-off you gave them by your in-network participation.
Remember: It never hurts to ask. That's what negotiating your PPO fees boils down to. While many practices don't even bother, now you have a strategy in place to take back control of your income.
Sarah Traeger is the content manager for the dental billing company Dental ClaimSupport.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
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