The landscape of dentistry is changing every day. Financial pressures from the cost of dental education, the competitive landscape in many urban areas, and the possibility of mid-level providers forces clinicians to stay educated about dental insurance networks. I have been an in-network provider for the past ten years, and it has been a bumpy road to say the least.
For those of you considering joining or leaving networks, most practices should focus on four key areas of their practice financials. A practice which understands these key practice indicators (KPIs) will be better prepared to enter into conversations with insurance networks. These KPIs are also critical if you are considering hiring a third party to help with negotiations and contracts. Being an educated consumer about the financial status of your practice will ensure you choose the right company for you.
What are the top codes that account for about 90% of your yearly production?
When reviewing possible contracts with insurance networks, providers should know which CDT codes account for 90% of their annual production. This should be a simple report to pull from your practice management software and exported to a data software like Excel for analysis. Most insurance companies will provide a fee schedule focusing on the top 20 codes used by dentists industry wide. This may not accurately reflect your own unique practice. How can you focus on the right codes for your practice if you are not familiar with your own diversified suite of services? If you prefer to do orthodontics or endodontics in your practice, do you really care about the reimbursement rate of overdentures? Know your top 90% of codes based on production value and you will be able to focus on negotiating fees for the procedures that really matter to you.
Review your current fee schedules to see who is paying the best reimbursements for top codes.
Now that you understand which procedure codes make up 90% of your annual production, it is time to look at the fees associated with those procedures. Using your same spreadsheet, you can attach fees to each code broken down by each insurance provider. If you are already in-network with some companies, this is a great way to compare your reimbursement values from each company. This analysis will certainly aid in any decisions regarding your insurance participation.
How much production is attributed to each insurance company and then compare that value to your revenue from fee-for-service (FFS) patients?
Another important data point to consider is how much production is attributed to each network within your practice and also how much is attributed to FFS patients. When trying to make decisions about adding or dropping networks, a practitioner must understand how much of his/her practice is being influenced by in-network and FFS patients. If a network makes up 90% of the production value of your practice, you are much more beholden to that company until fundamental changes can be made. Understanding how much influence a particular company has on your practice will improve your ability to make decisions moving forward.
How many patients are attached to each insurance company and how many patients are FFS within your practice?
It is important to understand not only the production value of each insurance company in your practice but also how many of your existing patients are participating in that network. This is especially important if you are intending to add a network. Existing patients in your practice that are insured by a network you may add will receive the immediate discount on your contracted fees. This discount will occur before you have ever seen your first new patient by joining the network. If the network you are considering has 20% market share in your practice, your loss of income on those existing patients may not outweigh the new patient flow that may result by going in network.
With all of these data points in mind, you are ready to take your next steps in understanding PPO network negotiations. You are prepared to either hire a company to help manage that process efficiently or continue on this path on your own. Either way, you will be much wiser and better prepared for the more challenging conversations ahead. Remember, there are lots of other nuances when trying to understand insurance networks and how they are operating together. The best we can do as practitioners is understand our practice, its composition, financial parameters, and suite of services so we can make the best choices possible for its future success.
Dr. Jennifer Bell is a native of Lexington, NC. She earned her undergraduate and dental graduate degrees from the University of North Carolina at Chapel Hill. Upon graduation, she completed the Advanced Education in General Dentistry program at the Veterans Administration Medical Center in Fayetteville, NC. In 2010, Dr. Bell along with her business partner started a general dentistry practice in Holly Springs, NC. They opened their second practice in Angier, NC in 2017. Dr. Bell has earned fellowship from the Academy of General Dentistry where she has served the North Carolina state chapter as president, committee chair, national delegate, and most recently as executive director.