Can I negotiate a better PPO dental fee schedule?

How to get a dental insurance fee increase is a common concern we hear among dentists and dental teams. Can you negotiate your PPO dental fee schedule? It’s a fair question - when you enter a contract with an insurance company, you still want to know when you have the opportunity to rework your fees before the contract ends, and have more say in setting reasonable and fair rates. 

Well, the short answer is yes! You can negotiate PPO dental insurance fees. But, of course, there is a longer answer. 

Dental ClaimSupport has worked for over ten years with dental teams who are frustrated with low insurance payments and want to negotiate higher PPO fees. And in our experience dealing with insurance companies, we always encourage dental teams to negotiate their fees. 

It can never hurt to ask, especially if your payment rate is over 20% lower than your regular fees.

In this article, we will share the best strategies when negotiating your PPO dental fee schedule with insurance companies. With these strategies, you can approach insurance companies prepared and confident in your ability to renegotiate more favorable PPO contract fees. Not only will your practice make more money, but it will also give your team more control over your income. 

First things first - prepare to negotiate your PPO insurance fees

You’ll first have to make the request to negotiate your PPO insurance fees. 

As with every kind of negotiation, you can’t go in blind. You need to do your homework and come to this phone call with the provider relations department prepared. This means you need to gather some data on your own dental practice and the PPO plan details.

Most of the reports we will discuss can be found in your practice management software. Presenting raw data and previous fees to the insurance company will give you an advantage that is needed to be successful in this negotiation. And knowing what you’re talking about will help you fight for the fees you deserve. 

Bring facts and reports to the table when negotiating PPO insurance fees

Run your software reports to determine the average net production generated per new patient to determine your new patient value. To do this, divide the total amount of net production on the new patients seen in the 12-month period by the number of new patients seen during that same time period. 

You should also print your current practice ADA/fee schedule list to run a fee analysis that will compare the current full fee schedule with the proposed PPO fee schedule. You can then print out a report that shows the collections for each insurance carrier involved in the PPO plan over the last 12 months.  

After you determine what % on average you are writing off, then mathematically figure out the potential loss if you join the PPO plan instead of fee for service plans as you enter into a PPO contract. Most practice management software programs can report the amount of revenue collected by each insurance company in your database.  

You can then figure out what your in-network collected amount will be based on the percentage of your fee they allow. This information is useful for your negotiation of the highest reimbursement amount possible. Consider your options and present the data to the insurance company.

And finally, review your annual or semi-annual Profit and Loss Statement (P&L) to determine what your breakeven point is and what your overhead percentage is.  

Most general practices will have an overhead of 50-65% (note that this may be larger now since the pandemic). The average profit is typically about 35% this means that for every dollar you earn, .65 cents is taken for all the costs involved (your fixed and variable expenses) and this doesn’t even include owner’s compensation. 

Now that you’ve done your research, how exactly do you present it to the insurance company?

Let’s get into negotiating. 

First, if you see that your write-off is higher than you can financially afford - let the insurance know the specific codes they need to improve on to keep your numbers under a 20% insurance write-off. 

Note that you may have signed a contract with your PPO plan, and most likely are prohibited from sharing that info with anyone outside your employee list. This is included in an NDA (Non-disclosure agreement).    

You cannot share the fee schedule with other insurance carriers if you contractually agreed to keep it private with a non-disclosure agreement. Keep this in mind.

The insurance company presents the contract and fees to you - now what?

So now let’s say insurance proposes a plan to you. If the proposed plan write-off percentage is too high, you need to determine if you can financially afford that cut in income. 

If you are only at a 35% profit margin and you are writing off over 20 percent of your fee your profit is low and there is little money left to reimburse into the practice needs or the owner’s compensation. This is where the data that you’ve gathered comes into play.

We have seen cases where the write-off is 40% and the practice has cash flow issues. A practice must develop effective systems to keep the overhead as low as possible as well as the schedule as full as possible to maintain profitability. If you present how the proposed fees will not work for your practice financially, they will be more likely to negotiate a fairer fee. 

We spoke with one of our own billers who has helped dental teams negotiate PPO fees several times. 

“I called the PPO Provider Relations Department and explained to them that our overhead is at 65% without the owner's compensation, and that the proposed fee allowance is too low at over 25% lower than our fee. We would have no profits!” She explains.

“I also explained that our existing patients would now be in-network and we would have a loss there as well. The PPO representative was able to negotiate a more favorable fee allowance.”

Stating the facts in a calm and nice manner greatly improves your chances of re-negotiation.

Most contracts require you to bill your full fee. If you submit the reduced fee, you will rarely get an increase in your fee from the PPO - if you had been incorrectly billing your reduced fee, then you should also bring it up to the insurance company. 

Your statements, treatment plans, and walkout slips should always show the in-network savings.  The patients will appreciate the PPO contractual write-off you gave them by your in-network participation.\

Now that you have negotiated your new PPO fees, make sure they’re put into your software correctly for success

It never hurts to ask. That’s what negotiating your PPO fees all boils down to. So many practices don’t even bother. But now you have a strategy in place: you know what reports and data you need to gather in order to present your case for higher PPO insurance fees. This is what successfully taking back control of your income looks like! 

Dental ClaimSupport has consulted with many practices about negotiating insurance fees and has plenty of resources on our website to help you be successful when dealing with insurance companies. 

Now that you’ve figured out your PPO fees, you need to input them into your software. Learn why it’s so important your PPO fees are updated in your practice management software in our Learning Center.