Learning to Live With Managed Care Plans

Contract negotiation and ongoing evaluation are essential to success

Richard P. Gangwisch, DDS

Preferred provider organizations (PPOs) are taking over the insurance world. Indemnity dental insurance is dying, and managed care is here to stay. When it comes to patients' finances, dentists have always had to compete with things like house and car payments, taxes, food bills, and other important needs that leave less money in patients' pockets to pay for things like dental treatment. And now we have to add the lower reimbursements from PPOs into the mix.

Patients are trained by medical insurance to seek out providers in their networks. If a family were to go out of network for their medical care, just spending one night in the hospital could be economically devastating. As a result, it seems that many patients carry this thought process of only going to in-network providers over to the dental field, even though the fees for dentistry usually pale in comparison to those for medical care. Oftentimes, the cold-hearted realities of business make our decisions for us, and when faced with this one, many decide to go with managed care.

What Is Managed Care?

Managed care is the method that insurance companies use to control costs and expenditures. To keep their premiums as low and competitive as possible, insurance companies have to find as many ways as they can to remain profitable. Therefore, they lean on the dentists to control their costs. Managed care can come in many different flavors, with some more bitter than others, including the following:

• Health maintenance organization plans. These can involve a capitation plan or a fixed fee that is only reimbursed to a contracted provider.

• Preferred provider organization plans. Patients pay higher fees for out-of-network services, but at least they are able to see the dentist of their choice.

• Point of service plans. These are like health maintenance organization plans, but patients can get their care out-of-network.

• Exclusive provider organization plans. Patients with these plans must use a network provider.

• Discount plans. The "insurance company" doesn't pay anything to the provider; the patient is given a huge discount by the provider in return for the referral.

Negotiate Your Contracts

Once you have made the decision to add a managed care component to your practice, you need to start finding ways to make up for the loss from the discounted fees. It all starts with the contracts. By negotiating directly with the various insurance companies, you can at least improve your bottom line.

Before we delve into the nuances of contract negotiation, I should warn you that such efforts can sometimes be fruitless. An insurance company could very well be in a position to tell you to "take it or leave it." I recently spoke to a group of Hawaiian dentists, and it turns out that there is only one major player in their insurance market and that 90% of their patient population has that coverage. I advised them to not give up hope. It never hurts to ask. If you don't ask, you certainly won't get any concessions, and the worst thing that an insurance company can say is "No."

If there are relatively few providers in your area who are currently under contract with a particular company, you will have better negotiating powers. If you have a lot of patients who carry that insurance, that will also help to better your negotiating position. Start by calling the PPO network manager and negotiating verbally. There is something to be said for using the human touch. Don't be confrontational or combative. Make it appear that you are out to make this a win-win situation. PPO managers are not going to be interested in the fact that their low reimbursement rates will affect your ability to put food on your table. They will be more interested in how paying higher usual, customary, and reasonable (UCR) fees will be a good incentive to keep a quality dentist in their fold.

Potential Pitfalls

Make sure that the fee schedule that managed care plans present you with is for your zip code. I practice in the suburban Atlanta, Georgia, area, and I can't tell you how many times I have received solicitations from insurance companies accompanied by fee schedules that looked appealing but, upon further research, were revealed to be the fee schedules for in-town zip codes. If a fee schedule is too low, you can ask if there are any providers in your area who receive a higher reimbursement rate. You can also ask if they would be willing to match a higher fee schedule offered by a competing plan. Insurance companies actually have a lot more flexibility in this regard than they will admit to. In the end, make sure that you get full disclosure of any insurance company's fee schedule.

Beyond issues associated with fee schedules, there are quite a few other contract pitfalls that would be best to avoid if at all possible. Try to secure a more than 30-day window for claims appeals. Also, beware of 30-day filing limitations (ie, 30 days from the date of service or the end of business date from a primary payor). If a company will not negotiate that, then ask for a "special circumstances" clause to cover situations such as loss of a key staff member or equipment failure. Computer servers do go down occasionally.

Don't allow for unilateral changes by payors. Some companies have provisions where only a 30-day notice is required to make any change to your contract that they wish. There's a good chance that whatever changes an insurance company makes will go against the desires of the dentist. If a company won't strike such a provision, negotiate to at least have them insert some language that gives you the right of approval of any midterm changes or the ability to terminate early so that you don't get stuck.

Be wary of vague contract language. It is best to consult an attorney regarding anything unclear. Insurance companies often try to sneak unilateral provisions into policies using certain phrases, including the following:

• As may be deemed necessary

• From time to time

• As may be established by the payor (especially if it occurs with "from time to time")

• May be modified or added at the discretion of the health plan

It's also a good idea to watch out for contracts that are extended to "affiliates." You may be doing discount dentistry that you are not aware of. If the payor has affiliates, make sure that there is a firm list of all affiliates so that they cannot "lease" your services or subject you to blind or silent PPO activity.

Engage in Ongoing Evaluation

Once you have signed onto a plan, check your claims history along with the contract every 6 to 12 months to see if it is cost-effective to retain that plan in your practice. Take into consideration any excessive denials, "downcharges," or changes to the contract language. Is any aggravation that you're experiencing worth keeping the plan? Drop any plans that don't align with your goals or that are underperforming. However, when dropping plans, be sure to give your patients sufficient notice (and potentially alternative solutions) in order to avoid any nasty scenes at the front desk. Hopefully, because you provide high-quality patient care and engage in good internal marketing, you will be able to retain a significant number of those patients, even though you will be out of their network.

About the Author

Richard P. Gangwisch, DDS, a master of the Academy of General Dentistry and a diplomate of the American Board of General Dentistry, is a clinical assistant professor at the Dental College of Georgia at Augusta University and practices in a Heartland Dental-supported office in Lilburn, Georgia.