JUNE 2022 ISSUE
JUNE 1, 2022
Source
Record-high inflation rates are spiking lab, supply, staffing, and other overhead costs. While we’ve recommended raising your fees, meanwhile PPOs are actually cutting their reimbursements, dramatically increasing your potential write-offs (adjustments). Below, practice management expert Bill Rossi* provides insights on the latest PPO trends and how to play your cards to increase profits.
Recently, Delta Dental of Missouri sent letters to many participating providers to the effect of: “We noticed you are participating with other PPOs, and here’s a list of them. As a result, we’ve decided to reduce your fees. We’ll reinstate your Delta Premier Level fees if you drop these other PPOs.” Needless to say, a lot of dentists felt this was a form of blackmail. Unfortunately, if this heavy-handed negotiation tactic works for Delta in Missouri, it will likely spread to other states.
Furthermore, in many other states, Delta is gradually squeezing out its Premier Program by insisting that new associates and newly created entities participate only at regular Delta PPO level fees. While there are variations throughout the country, Delta PPO fees are generally 15- 20% lower than Delta Premier fees. And Delta Premier fees sting enough, because they’re typically 25-30% lower than your full practice fees. As a result, participating with Delta’s PPO adds a whole new level of pain (lost revenues).
If you have an option to participate in Delta Premier, you should seriously consider it. Rossi is happy to speak with you in advance to help you make the best decision.
Meanwhile, the PPO “poker games” are not only being played by Delta, but also by CIGNA. CIGNA PPO fee reimbursements are the most variable of any PPO we’ve seen. In some cases, offices have just a 15% discount off their full practice fees, while others are plagued with discounts of up to 50%. Recently, CIGNA wrote letters to many participating dentists, announcing they were reducing their fee reimbursements by anywhere from 15-40%.
In response, many doctors are threatening to go out of network with CIGNA PPO. In some cases, CIGNA has “blinked” and restored the fees back up to their original level. Thus, it’s evident there’s some definite gamesmanship (playing poker) involved in negotiating with PPOs!
With inflation raging at an 8% annual rate, overhead costs for lab, supply, equipment, and staffing are surging. Meanwhile, most dental practices are very busy, with the highest percentage ever being maxed out (operating at 100% of capacity), as discussed earlier. While you may have increased your regular fees as we recommended, the declining PPO reimbursements mean that your write-offs (discounts) will be dramatically increasing in the future unless you take action.
Make sure that you’re tracking your production, collections, and adjustments (write-offs) separately for each PPO that you’re participating in. Next, determine the write-off percentage by dividing the production by the adjustments for each plan. Then develop a PPO action plan, dropping or renegotiating those PPOs with the highest write-off percentages first.
*Bill Rossi offers practice management services for dental practices, including PPO analysis and exorcisms, through Advanced Practice Management. Rossi is offering a free 30-minute PPO consultation to McGill Advisory members, so contact him at 952.921.3360 or visit www. advancedpracticemanagement.com to take advantage. We receive no compensation, either direct or indirect, for this recommendation. We make it because it’s good for you, not because it’s good for us!