There I was, sitting in a Utah Dental Association (UDA) Continuous Quality Improvement (CQI) meeting that all practicing dentists in our state must attend if they want their malpractice insurance rates to stay low. These meetings are conducted by our UDA officers, and they do a good job at bringing issues to light which help us be better practitioners.

On one occasion, our UDA President was taking questions and giving out answers to the best of his ability. One of our colleagues asked the question that many dentists have wondered. “How do insurance companies determine their contracted fees with us?” Our UDA President quickly replied, “They are determined by our fee-for-service (FFS) fees, and it’s critical when you send in your insurance claims that you send in your FFS fees and not the contracted fees.”

One of our colleagues sitting next to me, of whom I did not know, leaned over to me and whispered, “That’s not true”. Little did he know who he was sitting by. I have known for years our FFS fees have nothing to do with reimbursement rates from insurance companies. How did I come to this knowledge you might ask? It was simple…I just asked the insurance companies that very question.

I’ve been a Private Investigator for years, and I have had the fortunate opportunity to work with some incredible PI’s who are retired special agents of the FBI and detectives from local law enforcement. That being said, we all conducted an investigation surrounding three simple questions which were directed to dental insurance companies. One of those questions was, “How do you determine your contracted fees with us?” Below is the answer we obtained from all but one of the 26 Dental Insurance plans I currently take. The one that didn’t respond like the others simply did not know.

What we learned was:

  1. Contracted insurance fees are not determined by our FFS fees. Unless you submit a FFS fee that is less than the contracted fee, at which time it is completely determined by your FFS fee you submit. I hope you got the satire there.
  2. Contracted insurance fees are determined by the CMS (Center for Medicare Medicaid Services).
  3. The CMS fees are determined by:
    1. The resource-based relative value scale (RBRVS) via the Omnibus Budget Reconciliation Act of 1989.
    2. Relative value units (RVU’s) or the actual direct operating costs to do a procedure at the least possible fee
    3. Geographic Practice Cost Indices (GPCI’s)
      1. Cost of living, malpractice insurance, practice/cost expenses
      2. FFS fees have zero bearing on these indices
    4. Conversion Factors (meaning PROFIT AND LOSS)

And guess which one above matters the most according to those insurance representatives we talked with who were in the know? If you guessed 3.d. above you get the gold star! Profit and Loss my friends, or as they like to call them, “conversion factors”. That was the determining factor that held the greatest weight with all the insurance companies when determining contracted reimbursement fees. Except for one insurance company….

One representative I talked with told me they actually have no idea how they set their reimbursement rates for their contracts. That person said, “there is a room downstairs, which we are not allowed to enter, where several individuals gather every two weeks, and that group of individuals set policy for everything we do”. You got to love and respect honesty.

So, the next time someone tells you how important it is to send in your FFS fees to your contracted PPO insurance plans, because that’s how they raise their reimbursement rates, either set them straight, or chuckle inside and let it go. Either way, please find out more information about the “Clinical Business of Dentistry Training” from My Practice My Business, where dental consulting becomes more than systems protocols, where you can learn more truths about dental insurance, and how to dramatically increase profits within your own practice and our cloud-based dental software. Or, you can continue to watch revenue walk out your door every day, and experience heart burn as you pour over those EOB’s.

Rob Thorup, DDS

Clinical Director/Co-Founder

My Practice My Business

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