You work hard and provide fantastic clinical care to satisfied patients; it only makes sense to expect fair compensation in return. Unfortunately, that isn’t always the case with the ever-evolving payor landscape in today’s dental industry. Maximizing reimbursement is one of the most common discussion topics in our conversations with dentists, and navigating these waters requires a blend of strategic thinking, thorough analysis, and an understanding of the broader impacts on practice health. As leaders in the dental partnership space with more than 700 practices and 17 years of tenure, MB2 Dental brings a wealth of expertise to the table. Our goal is to empower dentists with knowledge, analytics, and strategies to optimize their practice’s performance and profitability. Here, we delve into two crucial considerations and best practices for private practice doctors evaluating their payor strategy.
Evaluating Your Cash (UCR) Fees
Regular evaluation of your cash (UCR) fees is critical to ensure your services are priced appropriately and signal the quality you provide. Current UCR fees can also be helpful when approaching a payor for a price negotiation. Calibration of UCR fees should always be the first step when addressing reimbursement strategy. Below are some factors to consider:
- Market comparison: We always advise against “across the board” price increases, as they do not factor in market data and/or the cost of delivering specific services. UCR calibration should be performed using benchmarks of local or regional data, and there are a variety of sound data sources for market dental prices available today.
- Scale of increases: Consider your patient base when making an increase and determine where you want your practice to stand in comparison to market prices. Does it make the most sense for you to be at the average or a specific percentile of the market? Also, we recommend capping the amount any individual fee is raised in a given year (typically a maximum of 8-10% per code) even if you find that a specific fee is substantially below market.
- Frequency of increases: We recommend conducting a UCR evaluation once per year; however, if you find your fees are substantially below market, it is acceptable to consider biannual reviews to stairstep your fees to market without creating “sticker shock.”
- Cost analysis: Of course, independent of everything else, the cost of delivery should be a factor when evaluating each fee. Consider the costs of delivering each service, including materials, labor, and overhead, to ensure your fees appropriately cover costs and generate margin.
Prices that are too high or too low can be problematic from both a patient demand and profitability perspective, but we almost always find that dentists skew toward under-charging their UCR fees. It is typically better to set a higher UCR and implement an appropriate and consistent discount plan than to have perpetually low UCR fees.
Evaluating Your In-Network PPO Participation
Many dentists’ long-term goal is to be a fully fee-for-service (out-of-network) practice, and we commonly field questions about dropping insurance participation. The reality is that more and more patients each year have dental insurance coverage, whether due to the expansion of employer coverage with PPOs or growing alternate sources like Medicare Advantage. This creates the baseline expectation in many markets that dentists accept their insurance or the patient will seek care elsewhere.
Cash patients tend to be higher-reimbursing but can be harder to find—there are a limited number in each market. Conversely, PPO plans are typically lower-reimbursing but represent a reliable source of new patients. Some of the healthiest practices we see have a purposeful blend of both PPO and fee-for-service patients; this mix allows the practice to have better control over the important levers of pricing and patient flow.
New and established patients are the lifeblood of a dental practice, but services need to be compensated at a fair price while maintaining desired patient volumes. With that in mind, it’s critical to evaluate the impacts on your new and existing patients and consider whether it makes long-term sense to drop a PPO.
Below are some key points to evaluate when looking at your PPO payor strategy:
- Comparing PPOs: Step 1, when considering dropping a PPO, is deciding which (if any) to drop. This single step is enough to cover in an entire future blog post—but some elements to consider are:
- New patient volume: what percentage of your new patients come from the carrier?
- Retention: patient retention varies across PPOs and can affect overall turnover.
- Reimbursement: how do the fees compare to those of other PPOs you accept?
- PPV: PPV needs to be considered in addition to unit reimbursement. We often see PPOs with similar reimbursement per code have notably different PPVs due to factors such as better treatment plan acceptance and richer benefit plan design.
- Out-of-network benefits: Step “1A” when considering dropping a PPO is how many of those current patients have out-of-network benefits. Solid knowledge of this ratio will inform how many patients you can expect to retain if you drop the PPO.
- Active patients vs. PPV: Dropping a PPO will almost inevitably result in a reduction of patient volume (active patients) from that source as some existing patients will seek treatment elsewhere—again dependent on out-of-network benefits. Are you confident an increase in production per visit (PPV) from the patients that remain will be enough to offset the forecast loss in patient volume?
- New patients: Similar to the existing active patient volume, you’ll almost certainly see a reduction in new patient volume when dropping a PPO. What strategies are you ready to implement to offset this reduction in new patients? New marketing initiatives? New service lines to attract patients?
- Patient retention: Almost universally, PPO patients are a higher retention population than cash patients. Dropping a PPO will affect patient retention because more patients will become cash patients. Ensure you have strategies in place to offset this, such as a membership plan.
- Communication: Dropping a PPO requires communication with patients. You’ll need to consider patient notification strategies and train your team to communicate participation status appropriately with patients.
- Overhead: It’s impossible to forecast impacts with 100% accuracy, so any PPO drop needs to be accompanied by a willingness and a plan to adjust overhead (typically staffing levels) should patient volumes drop more than anticipated.
At MB2 Dental, we understand that every dental practice is unique. We support offices that are fully fee-for-service, fully PPO, and everything in between; we are here to help our practices succeed and achieve their growth goals. Our dedicated Payor Strategy team helps our dental partners thrive by navigating these challenges successfully, leveraging the best experts in the industry and our proprietary analytics tools. Partnering with MB2 Dental allows you to lean on our extensive network, resources, and strategic insights, freeing you to focus on what you do best — providing exceptional dental care.
Whether you’re considering changes to your payor strategy or evaluating your fee structures, MB2 Dental is here to support and guide you every step of the way. Our collaborative approach ensures that while you retain complete clinical autonomy, you benefit from the strength of a larger network and the shared knowledge of hundreds of successful dental entrepreneurs. If you’re interested in learning more about partnering with MB2, fill out the form below to speak with one of our doctor partners today.
