Case Study Shows

21% Fee Schedule Increase After Renegotiating PPO Contract

By Shelley DeGroff, Founder of PPO Advisors

Many dentists today feel frustrated because they’re working harder than ever, but their revenues seem flat, and they can’t understand why. What they’re feeling is real and it’s most likely because their PPO contract is draining income from their practice. To explain what’s happening, I’ll share the story of one client.

This client is a solo provider with one location and annual production of about $800K. When we began working with the provider, the staff consisted of the dentist, who owns the practice, two hygienists, two dental assistants and two workers who handle all the front office duties. The provider was in-network with all the national carriers, but they hadn’t negotiated fees for seven years. During that time, the insurers put fee schedule increases in their contracts which the provider assumed would be enough to cover rising costs. What they didn’t know was that the networks weren’t paying them based on the fee schedule.

Most Favored Nations Clause Lowers Reimbursements

In our first meeting we learned that the provider didn’t understand their PPO contract, found the management of insurance to be overwhelming and they were intimidated by the idea of trying to deal with it. Even if they wanted to wade into the details of their PPO contract, they lacked the time it would take. Consequently, the provider just went along with the fee schedules offered in their PPO contracts, accepted modest increases, and went about their business. They knew nothing about a clause in their contract that allowed insurers to pay less than the agreed-upon fee schedule.

The Most Favored Nations clause is a product of Shared Lease Agreements and allows insurers to by-pass the fee schedule listed in the PPO contract in favor of the lowest reimbursement within their shared network. For example, Aetna is a part of a shared network with several other insurance companies. Within Aetna’s network, if one of the other insurance companies has a lower reimbursement for a particular procedure code, Aetna is able to bypass the original contract for that procedure code and reimburse at the lower fee. Even though the Most Favored Nations clause has become a standard part of PPO contracts, most providers have no idea what it is or how it overrides their fee schedule agreement. When providers complain about working more but earning less, I tell them about The Most Favored Nations clause.

Free Analysis Leads to 21% Average Fee Schedule Increase

After our first meeting, the provider signed up for PPO Advisors’ free analysis and our team went to work negotiating fee schedule increases that would cancel out the effects of Most

Favored Nations clause. We did a total of four transitions, changing the fee schedules with Aetna, United Health Care, Principal and Cigna. After seeing an average fee schedule increase of 21% across the four carriers, the provider signed on as a client.

After negotiating the fee schedule, our team began the work of transitioning. This phase requires a series of steps and isn’t designed for instant gratification. Most of the transitions were completed in 90 days, while one of them took six months to become active, but all the fee schedule changes went through as planned. We projected that over a 12-month period, the provider would see a $48K increase. In the end, they exceeded that target.

A practice is eligible for re-negotiations about every 24 months, give or take. When we work with a practice every two years, increases aren’t typically as dramatic. In the case of this practice, we still found some minor increases because there are always new networks coming into play. By then the provider was adding an associate, so we also took the opportunity to re-route contracts to ensure the associate would be set up on the highest fee schedule from day one. An ancillary benefit is that by having already helped increase collections, we made it easier for the provider to attract high caliber candidates who could see the potential to earn a good living.

Frustration Leads to Vigilance – Provider Now Takes Proactive Approach with Insurers

While the provider was very happy with the outcome we achieved for them, it was painful for them to learn how they’d been misled by the insurance companies. They were especially shocked to discover they’d never seen the benefit of the fee schedule increases in their contracts over the years. In fact, they were only getting 47% of their Master Fee Schedule. At least now the provider understood the source of their original frustration. For many years, they HAD been working harder and earning less.

The experience also woke the provider up to the fact that their whole team needs to be more aware and engaged about everything related to their insurance. They have a fuller appreciation for the ways carriers can impact revenue and now know what to watch out for, such as discrepancies in claims which can become a big money loss. At the end of the day, the client learned it’s better to be proactive and deal with insurance issues than to avoid them.

If you suspect revenues at your practice aren’t what they should be, let’s talk. We are here to help providers who are ready to take a hard look at how their PPO contract is impacting their income. Our free analysis will let you know what fee schedule increases you can expect before you commit. To learn more, contact us at PPO Advisors and start working smarter, not harder

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