Dear Dianne:
I read your article on raises (July 2005 RDH), but you did not address a situation that I am currently involved with in my practice.
The practice I work in is involved with several PPO/HMO providers. My employer always argues that even though I may produce three times my wages, the insurance companies do not pay the full fee for the services. For example, one company pays quite a bit less than what we charge for an adult prophy and the dental office has to write the rest off (because of contractual agreement amount).
So, at the end of the day, according to our gross fees, I produced three times my wages. However, when looking at what the insurance companies will pay (because the rest gets written off), my net production is low. Every insurance company and plan is different in how much they will pay for an adult prophy, etc., so I was wondering how you would handle this raise dilemma.
Wondering in Washington
Dear Wondering:
First of all, let’s clarify for everyone how third-party providers can work. The initials “PPO” stand for “preferred provider organization.” Some large companies have entered into agreements with dentists to recommend their dental practice to their employees in return for the doctor accepting a reduced fee. While this helps dental practices get patients, the practice has to accept a reduced fee and cannot pass the full difference along to the patient. The patient is free to go to a dentist who does not choose to be a “preferred provider,” i.e., does not enter into a contract with the insurance company, but the benefit amount will not be as much, plus the patient will have to pay the full difference out of pocket.
Another form of third-party provider payment is an HMO, which stands for “health maintenance organization.” With an HMO agreement, the patient is forced to do business with a contracted doctor if he or she wants any insurance benefit. If the patient chooses to visit an out-of-network provider, there is no insurance coverage. Additionally, the doctor who signs on must accept the amount the company pays and may not pass the difference on. In most situations, there is an initial co-pay amount the patient has to pay.
A third form of reduced fee dentistry is something called capitation. In these agreements, insurance companies enter into agreements with doctors for a monthly amount that the doctor receives each month. For example, the doctor may agree to a monthly reimbursement amount of $5,000. That means the doctor will receive a check for that amount, no more or less, in return for treatment of those covered patients, no matter how many covered patients choose to come in for dentistry or the actual “fee” amount of dentistry performed. If you think about it, it is actually to the doctor’s benefit when patients do not come in for dentistry, since the doctor gets the agreed-upon amount anyway. Conversely, the doctor could lose money if a large number of capitation patients come in for treatment. Capitation patients are not free to go to any provider, but only those doctors who are in the capitation network.
In my opinion, this arrangement of capitation is not conducive to thorough patient treatment.
Many dental offices accept indemnity insurance. With regular indemnity insurance, the insurance will pay a portion of the fee, depending on the procedure, and the patient pays the uninsured portion, preferably on the treatment date. The doctor does not have to agree to a reduced fee, and the patient is free to go to any provider he or she chooses.
Insurance plans differ widely. Some have good reimbursement amounts, and some have very low amounts. For example, in one of my client offices, the doctor had signed on with a plan that only paid $3 for a periapical and $10 for a prophy. His hygienist’s wages were more than double that amount! Obviously, his practice’s bottom line was suffering.
As I’ve stated in the past, third-party benefits have become a double-edged sword, in that many people receive needed dentistry they might not have otherwise received, while others have abdicated their personal responsibility for their dental care.
I’m not against insurance - not at all. I like the fact that many patients get help through a third-party benefit that allows them to receive dental care. What I am against is discounted plans that do not allow the practice to pass the difference between what the insurance pays and what the patient actually owes over to the patient. It’s just bad business - actually a form of fee setting that, in my opinion, should be illegal.
At some point, all dental practice owners have to make a decision as to whether they will participate in reduced-fee dentistry. This is a management decision over which you as a staff member have no control. The primary reason doctors choose to participate is to fill chairs with patients. Sometimes, those practice decisions are good, and sometimes they are not. However, in my opinion, it is blatantly unfair to penalize staff members for management decisions that affect practice profitability.
Unless you are in a state that allows practice ownership, you are not the business owner, not even a part owner. However, they are asking you to pretend you are by offering low reimbursement (based on low adjusted production) for your services.
If reduced fee dentistry is a large part of the practice where you work, there are some options:
■ The practice needs to determine the total impact of the plans on the bottom line. How many patients have this insurance, what is the write-off, and what would happen if the practice discontinued participation?
I don’t usually recommend a “cold turkey” approach to getting off plans, but I do recommend (and have helped several extricate themselves from bad plans) a systematic plan to eliminate reduced-fee dentistry from the practice.
■ The practice needs to negotiate with the insurance companies for better reimbursement. This is a little known fact, but some insurance companies will negotiate their fees, especially if they think they are going to lose a big provider. How often is the practice submitting new fees to the insurance company? Insurance coordinators should be submitting updated fee schedules on a regular basis.
I know a doctor who told one of his providers that he was discontinuing participation because of low reimbursement. The provider, not wishing to lose this particular office, asked the doctor to submit a new fee schedule. The doctor did as the insurance company requested, and the insurance company increased its reimbursement very close to the doctor’s regular fees.
The office should not expect you to accept reduced wages just because they chose to accept reduced fees.
However, the office can’t pay out what it doesn’t take in, so if your office is mired in HMO/PPO dentistry, maybe you need to look elsewhere for a truly fee-for-service practice - one that can afford to pay you what you are worth.
I urge you to track your production every day, and also track “adjusted production” - that’s production after write-offs. You need hard data to see just what your salary/production ratio is.
Warm regards,
Dianne
Dianne D. Glasscoe, RDH, BS, is a professional speaker, writer, and consultant to dental practices across the United States. She is CEO of Professional Dental Management, based in Frederick, Md. To contact Glasscoe for speaking or consulting, call (301) 874-5240 or email [email protected]. Visit her Web site at www.pro fessionaldentalmgmt.com.
