Fair Health

Is Giving Insurers an Unfair Advantage Over Providers

Insurers are always coming up with new ways to pay providers less than what’s listed in their fee schedule. Their latest strategy relies on data provided by Fair Health, an independent nonprofit that was created to help keep insurers in check. Find out how insurers are exploiting Fair Health’s massive database and creating an unfair situation for providers.

At PPO Advisors, we like to keep our clients informed about the different strategies insurance companies use to reduce payments to dental providers. By educating providers, we help them know what to watch for and how to avoid some revenue-reducing ploys. It’s a constant battle, just when you’ve figured out one trick, insurers come up with something new.

One of the latest we’ve discovered involves Fair Health, an independent non-profit organization that was created to give consumers better access to information and provide more transparency around pricing. Instead, it appears that insurers have found a way to co-opt the organization in order to advance their own goals.


Fair Health was Founded to Improve Transparency

First a little background on Fair Health. It was established as part of a legal settlement reached by the Attorney General in New York that was investigating insurers on behalf of consumers. Consumers complained that insurance companies were misrepresenting usual, customary and reasonable charges (UCR) for services. Upon review, the NY Attorney General discovered the companies were coordinating to set UCRs with the help of a database firm owned by United Health Group. It was an obvious conflict of interest which led to a settlement and the creation of Fair Health.

Today, Fair Health is the nation’s largest repository of private claims data. As an independent non-profit, they are meant to be an unbiased entity that uses their massive data base to bring transparency to healthcare costs. The problem is that insurers have found a way to exploit Fair Health’s data by using it to justify lowering reimbursements to providers.


Another Tool to Lower Fees

As part of their mandate, Fair Health collects data, including pricing for every procedure, from every dental provider in the U.S. Insurance companies have access to all the data, and they use it to determine the average lowest cost for each procedure by zip code. If the average is lower than what’s in the fee schedule the insurer agreed to, they ignore the fee schedule and reimburse based on the average. For example, if you have a procedure that calls for insurance to pay $100, and Fair Health shows the average cost for that procedure in your zip code is $60, that’s what they’ll pay, regardless of your fee schedule.

How do they get away with it? The same way they get away with everything – it’s in the contract. If that comes as a surprise, you’re not alone. Given the growing complexity of PPO contracts, few providers understand them.


An Unfair Advantage Made Possible by Fair Health

If a practice owner wants the same access to Fair Health’s data base that insurers have, it will cost them $2,000.  Fair Health offers a limited amount of free info to providers through its website, but to get all the fee schedules for your zip code, which is what a provider would need to try and protect themselves, it’s $2K per office. If you have more than one office in different zip codes, it’s a separate fee for each.  Fair Health maintains the fees are a necessary part of fulfilling their mandate to generate income to cover expenses. I’m sure that’s true, but it puts dentists at a great disadvantage.

What’s really happening is that under the guise of transparency, insurers get to see what their competitors are paying out. Using Fair Health’s extensive data base, insurers can compare what they’re paying doctors and can then opt to lower payments to match competitors.

Meanwhile, dentists are NOT allowed to compare pricing information. Can you imagine providers in a community getting together to agree upon charges for services? It would be a violation of free markets and the law. At the same time, it’s okay for insurance companies to compare notes through Fair Health in order to lower reimbursements. The lowest average fee for service creates a rush to the bottom that doesn’t consider factors such as provider experience, overhead, supplies, etc.

This situation raises a fundamental question: If networks can arbitrarily ignore the fee schedules in their contract and use external criteria, such as Fair Health, to determine reimbursements, how can providers compete?


How to Level the Playing Field

The team at PPO Advisors wants to put the brake on this race to the bottom and we need your help to do it. The first thing you can do is make some noise and get the attention of the American Dental Association (ADA). Members of the ADA get free access to ADA lawyers who can review your concerns and make sure they’re heard by the people in the organization with the power to act.  The second thing you can do is to make sure you keep your master fees at a reasonable rate, one that is not too low. Doing so limits the insurance companies’ ability to significantly reduce reimbursements based on averages within a zip code.

The team at PPO Advisors is committed to helping dental providers get a fair deal. Contact us to learn more about how we can help your dental practice.

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