A Look Inside: Understanding Dental Insurance PPOs
“Time, as it grows old, teaches all things.” – Aeschylus (the father of tragedy)
Dental school doesn’t teach much of anything about dental insurance. Which is strange, because dental insurance is how most of our patients pay for our services. If you are an established practice owner, you probably already know a thing or two about PPOs and other insurances; so this post is more geared to the newbies.
PPO stands for Preferred Provider Organization; and is a very common type of health/dental insurance plan in the United States. If you agree to be a “Preferred Provider” with an insurance company, you sign a contract to work with that specific insurance company. When you sign that contract with the insurance company, you are now what is called “In-Network” with that insurance. This is what patients are typically looking for when they ask, “Does this dentist take my insurance.” Some dentists like to play shifty wordplay games with their patients and tell them “Yes! We take your insurance and all insurance!” When they know they really aren’t in network. Technically you can “take” anything, it just doesn’t mean the insurance will pay. I would recommend being honest and straight-forward with your patients regarding if you are an in-network provider or not. Then the ball is in their court regarding if they want to pay extra money (or not) out-of-pocket to see you for care.
What Does it Really Mean when you are In-Network?
When you are in-network with an insurance company; it doesn’t simply mean that you “take” that insurance and can therefore be paid for any and all procedures for patients with that insurance. When you are contracted with an insurance company, there is typically a set of rules along with that contract.
First and foremost; you will typically be agreeing to take a reduced reimbursement from your full price office fees. This gives the patient a discount. Yay! Patient’s love discounts! Booo businesses hate to give discounts! (Except Walmart and Amazon – they love discounts, and seem to be pretty successful businesses, hmmmm).
For example, if you office fee for an all-ceramic crown is $1,500 and you have a contract with Delta Dental as a Preferred Provider – Delta can say that the contracted fee for an all-ceramic crown will be no greater than $900. In addition to your patient getting a discount, the insurance will also pay for a portion of their treatment. (Patient’s love when their insurance pays for portions of their treatment FYI). The percentage at which the insurance company will pay on a procedure will vary. Let’s say for our crown, the insurance will pay at 50% coverage. So in this example; from our original $1,500 crown — we reduce, or ‘adjust,’ the fee down to $900 and then the insurance will pay $450 and the patient will be expected to pay $450. So when all is said and done, our patient is paying $450 for an original $1,500 crown. Pretty good deal for them. To summarize, patient pays $450, the insurance pays $450 — to total to the $900 allowed amount. The $600 difference between $1500 and $900 disappears. Nobody pays you that money. And you are not allowed to collect that $600 difference from the patient. If you do, that’s bad. You can be liable for insurance fraud and result in paying major fines. So you probably shouldn’t do that.
But you want that extra $600! You’re a highly qualified dentist-doctor; your supplies are expensive, and you know what your services are worth! (Hint: The worth/value of services is determined by what the market is willing to pay, not by how much a dentist paid for their skills/practice). Many dentists are able to have thriving practices while NOT being in-network with PPO insurances. If you are NOT in-network with the PPO insurance, then you CAN collect that $600 difference. Some insurances will pay you NOTHING if you are not in-network with them. Some insurances will still pay you something (usually a smaller amount) if you are not in-network with them. When deciding to go in-network or out-of-network with the many PPOs on the market – do an evaluation of the local market economy in your region and decide which option is best for you and your practice.
So let’s talk about those ‘maximum fees’ that the insurances set when you ‘sign up’ with them. In our example about, the insurance set the maximum fee for the crown to be $900. Well, if you just ‘sign-up’ with an insurance, you are probably not going to get a number as high as $900. You are probably going to get a pretty low amount, maybe closer to $700 or less, if you just sign up. It is important to know that these fees are NEGOTIABLE with the insurance companies. You can negotiate for them to pay you more than their initial offer. In the long-run, this can increase the profitability of your office by 5 or 6-figures. Most of my PPO insurances that I am contracted with pay me over $1,000 per crown. However, some PPO companies (usually Delta Dental), will not negotiate. They are large enough and powerful enough that they don’t care enough about you if you decide not to go in-network with them.
PPO Umbrella Companies
There are also these things I call PPO Umbrella companies. They are companies that are actually insurance companies themselves; but are 3rd party companies that cluster together different dental insurances within them. An example of a PPO Umbrella Company is ‘Connection Dental.’ If you go in-network with the Umbrella Company, you are automatically in-network with all of the PPOs that are under that umbrella. (That may be 2 insurance companies or it may be 20 companies).
This can simplify things by negating the need for you to sign individual contracts with tons and tons of small insurance companies and instead just signing with the Umbrella. ALSO, sometimes you are better able to negotiate higher maximum allowed fees with the Umbrella Company than you would be able to negotiate with the individual smaller companies.
Overall, the more PPOs you work with – the more patients you will be able to serve in the community. People who have dental insurance typically want to go to a dental office which takes their insurance. Otherwise, why are they paying for it? If they have insurance, and you don’t take their insurance, and you still want them as patients, make sure you have a really good answer to that question. Keep in mind, the average American currently has less than $500 in savings.…
–DeAngelo S. Webster, DDS
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