Navigating the PPO Landscape and Improving Reimbursement: Some Practical Strategies
Independent and small group dental practices face a number of challenges in today’s marketplace. You encounter a unique set of obstacles that require adaptability, resilience, and strategic thinking. You must balance clinical responsibilities, administrative tasks, and business operations simultaneously. Providing exceptional patient care and running a financially sustainable practice requires a disciplined and strategic approach that goes beyond clinical expertise.
A critical component of your practice management strategy centers on how you manage your relationships with Preferred Provider Organizations (PPO’s). As we begin a new year, now is a great time to make sure you are taking the necessary steps to optimize your PPO agreements and put in place the strategies and tools that will support a financially sustainable practice. As with many aspects of practice management, one of the hardest parts is knowing where to start. Today’s article will help you get going.
First, let’s review some recent PPO market data.
- Greater than 70% of dental practices participate at some level with PPO’s. This ranges from those contracting with just a couple PPO’s to practices that contract with 10+ PPO’s.
- A majority of practices are seeing flat or very nominal fee increases year over year.
- A growing number of practices say they are considering reducing the number of insurance plans they accept and increase their fee-for-service patient base. Practices that are 100% fee-for-service, however, still make up less than 13% of the market.
- PPO participation remains an important factor in how patients select a practice.
- Massachusetts was the first state to legislate a Medical Loss Ratio (MLR) for dentistry. A number of other states are considering MLR laws in addition to expanded reporting requirements. Theories on the impact of MLR’s on premiums and covered services vary widely.
It is clear that the PPO model will continue to dominate the dental marketplace in the near term, so strategies to optimize your PPO relationships and maximize reimbursement are essential to the successful financial operation of your practice. Following are some practical actions for you to consider.
Check the health of your practice’s fee schedule. This is an important and often overlooked activity that should be done on an annual basis at minimum. Practices should compare their usual and customary fees to the fees in your local market. Focus on your most important procedure codes (usually 30-40 core codes) and make adjustments to be in line with the market. There are several reasons for conducting this analysis. First, it is common that many practices have not updated their fee schedule in several years. Second, over time, select fees can become out of balance with the market and require adjustment to be uniform and market competitive. Third, PPO’s use market data to set their fees. If your fee schedule is below market, it can pull down the average for the market as a whole and result in the PPO offering a lower fee schedule. Lastly, if you do not evaluate and adjust your fee schedule on a regular basis, you are neglecting the revenue opportunity associated with your fee-for-service (FFS) patients. If FFS is 30% of your practice, that represents a significant lost opportunity.
Inventory your PPO agreements. Identify the PPO’s you are contracted with and determine if you have copies of the provider agreements for each of those PPO’s. Contact any PPO’s that you do not have agreements for to request a copy of the provider agreement. Thoroughly understand the terms and conditions of contracts with PPOs, including fee schedules, network participation and reimbursement policies. As you consider dropping PPO’s, you will need to reference the requirements for termination and what it means for the patients that are with each PPO.
Identify the distribution of patients and revenue across all PPO’s. As a companion to inventorying your PPO agreements, you should regularly review the number of active patients and revenue associated with each PPO. This report can be a valuable tool in understanding the real value of each PPO to the practice. With it, you can regularly assess the performance of different PPO networks in terms of patient volume, reimbursement rates, and administrative efficiency. This data is also critical when beginning to assess steps to terminate select PPO relationships by providing insight into the potential impact on patients and revenue. You may find that there are a number of PPO’s that you could drop with minimal to no impact to your practice. This frees up time to pursue new FFS patients and can reduce the administrative burden for your practice.
Analyze revenue per patient and new patient activity by PPO. Having put in place reporting on revenue and patients by PPO, you should also analyze revenue per patient for your PPO’s. In addition, take a look at where your new patients are coming from and how the revenue for those new patients compares across plans (and compared to your FFS patients). You can use this data to identify the PPO’s that provide the most new patients and have the highest per-patient yield. You will also be able to identify those PPO’s that don’t bring you new patients or an acceptable per-patient revenue level.
Make sure your PPO fee schedules are current and request increases. Keeping track of fee schedules is critical. This includes tracking the history of fee schedules for each PPO and when the most recent fee schedule was issued. It also includes confirming that you have the most current fee schedule from each plan. From here, you can contact PPO’s to request fee increases. Not all PPO’s will negotiate fees – but even those that don’t negotiate will make annual adjustments. Some PPO’s will not adjust fees until asked while others will only consider adjusting fees for select services. In all cases, it is important to be proactive, persistent and make sure you have the most current fee information. Securing adjustments takes time and requires consistent follow up.
Understand the different ways you are contracted with PPO’s. The current landscape of PPO’s and insurers has produced a confusing web of overlapping networks, agreement models and payers. Many practices treat PPO patients that fall under direct agreements, shared network agreements, umbrella networks and third-party administrators. This can be confusing and negatively impact your reimbursement. Take the time to understand where your patients come from and, in circumstances where agreements overlap, determine which agreement is driving your reimbursement. When you identify the most favorable fees within the overlapping agreements, you can begin the process of optimizing participation and reimbursement.
The challenges presented by PPO reimbursement and administrative requirements can be daunting. Staying on top of it all requires a clear strategy, good analytics, expertise, persistence and time. It can also benefit from an experienced advocate who is focused on supporting independent practices and has your best interests in mind. BEST for Dentistry is here with the expertise and support you need to optimize your PPO participation and maximize your revenue. We can provide market data on setting your fee schedule, insightful reporting and analytics, and a logical road map for obtaining results. BEST for Dentistry will also negotiate with PPO’s on your behalf. If you want to drop PPO’s but are not sure how, we will develop a road map and guide you every step of the way. Our number one goal is to help you run a financially sustainable practice so that you can continue providing exceptional patient care to your patients.
To learn more about BEST PPO Solutions please visit www.bestpposolutions.com or use this link https://calendly.com/waltgramley_bestpposolutions/30min to book a consultation.