Billing Fee-For-Service Fees to PPO Plans: Truth Be Told

I had a great conversation with one of my respected and trusted colleagues (and friend) several weeks ago. The conversation was not an unusual one, as I have had this conversation with many of you who have been through some sort of consulting with various consulting groups out there. The simple question is this: Should you submit your fee-for-service fees or your contracted fees to the PPO companies you work with?

It’s a very simple answer when you talk with accountants, a “no brainer” when you talk with forensic accounting investigators, and it’s a “power struggle” when you listen to dental consultants. The accountants and legal investigators think the consultants are nuts with how they are teaching accounting principles, and the dental consultants pull the phrase, “those accountants and investigators have never ran a dental practice.” My wife currently has two business degrees, and she is working on her MBA. I am still a Utah Private Investigator. So yes, we have a bias. However, I’m going to let my consulting side come out and give good points on each protocol.

I want to first start out with the Pros of billing out your Fee-For-Service Fees on each and every insurance claim.

The Pros are:

1. If you accidentally attach a lower rate than you are contractually allowed to charge out, you will miss out on potential reimbursement dollars for services you rendered on that patient.

The arguments here are this:

  1. Sometimes a team member might accidentally input an incorrect fee to a covered code on the contractual fee schedule the insurance company gives you when signing up to be contracted provider. The input error happens when either placing contractual fees into your dental software for the first time, or updating a new fee schedule.
    1. The counter argument is this: Don’t make an input mistake. Have another team member double check the input data.
  2. Sometimes an insurance company might arbitrarily increase a reimbursement on an individual code. And if you are billing out your contracted fee, you will miss out on potential revenue.
    1. The counter argument is this: I’ve never seen that happen in over 30 years!

2. It will help you renegotiate a higher fee schedule with third party payers.

The argument here is this:

  1. Your fee-for-service fee has absolutely nothing to do with your contracted fee. I realize many of you out there are shaking your head thinking I’m crazy for making such a statement. But it’s true. I have over 30 recorded conversations with different third-party payers who made such a statement. The question we asked them was this: how do you determine your contracted fees with dentists nationwide? Here was their answer: They look at zip codes and fees being used in those regions with other insurance carriers (keep in mind, they currently are exempt from collusion and anti-trust laws, however, that is hopefully changing soon) but it simply comes down to profit and loss. In other words, how much they take in from premiums, and how much they pay out in the form of dental benefits. On top of that, they have to maintain a 30% corporate profit margin each quarter. They told us that when our payments are delayed, it’s because they are short from their corporate profit margins.

3. It helps the doc realize how much is written off when taking PPO Plans.

The argument here is this:

  1. You already know your fee-for-service fee is much higher than a PPO plan contracted fee. The question you need to ask yourself is this: why do you need to see those numbers each month? Does it change anything? There will be more to this argument in a minute.

And now for the Pros of billing out your Contracted Fees on insurance claims for services rendered.

1. You will know what your actual production is on any given day.

The argument here is this:

  1. No other business runs their accounting like many dentists do. What am I saying here? It’s brutal, because dentists don’t have business training. No business manager would allow their accounting managers the latitude of mistakes when inputting dental fees. They don’t tolerate those types of mistakes.
  2. You have the ability to be accurate with most software when it comes to the business accounting in the business of dentistry. So be accurate!
  3. And for the final point, you will know your actual production totals, this last one is huge! Imagine it’s your two-year matriculation time to renegotiate with a PPO plan. You go to battle, and get a higher reimbursement on the majority of fees across the board. You’re so excited, you’ve just won a battle with a third-party profit killer, and you’re ready to send off insurance claims at much higher fees. (Ok, realistically you might have received a 0.5% across the board increase, but hey, it’s better than nothing…right?) You’re billing out your fee-for-service fees, and you never catch the fact the third-party payer has been reimbursing you on the old rates since your renegotiation date. Say what? Guess what folks, there is no way to catch this unless you have Jedi powers, or unless you have your actual negotiated fees logged into your practice management software. Tracy has caught the insurance companies MULTIPLE TIMES stating on the EOB that our “submitted amount” was higher than our negotiated amount, when in fact it was not. Insurance companies are notorious at not changing newly negotiated amounts in their software systems. It was an easy catch on our end because we expect what we send out to match what comes back. How hard would that have been had we simply submitted our FFS and then written off what the “EOB stated” that we needed to write off? Does your insurance coordinator or OM take the time to “double-check” every single write-off to make sure they are accurate? It’s very unlikely that they do check… just keeping it real.

2. It greatly reduces the ability for front office fraud and embezzlement.

The argument here is this:

  1. If you talk with office managers who have stolen from the dentists they worked for, one of their common statement denominators is this: the dentist has no idea what is written off each month, let alone how to track it. With all the insurance write-offs, it makes it easy to funnel money into my “purse” with cash and checks. They tell us it’s easy to pocket payments and just pool them into the write-off column. They do a little at a time, which doesn’t make the write-offs seem out of line. Surprise!
  2. Office managers who have moved to another office, with the intent to commit fraud and embezzlement, do not stay long when the dentist is billing out their actual fees and requiring day-sheets at the end of each day. And the dentist is actually reviewing those reports.

I’m grateful for my CPA actually sitting down with me, years ago, to look at how our software could be more accurate when reporting production numbers. Here at MPMB, we help dental teams remove the temptation for fraud and embezzlement.

The latest statistics show that roughly 70% of dental offices experience fraud and embezzlement, but only 5% actually catch it. The question you need to ask yourself is why. I hope this conversation makes clear why such a small percentage actually get caught by you. The really good cheaters only take small amounts each month. If you have tons of write-offs, and you don’t review your day-sheet reports, you will never catch them. If you run your office with the accounting accuracy of a wet-compass navigated airplane on its way to Hawaii, you deserve to land on Gilligan’s Island.

2021-03-01T20:01:32+00:00

Contact Info

7138 S Highland Drive
Cottonwood Heights, UT 84121

Phone: 801.226.4420

Web: mypracticemybusiness.com

Recent Posts