Each dollar discounted comes directly from your profit!
Unfortunately, every dollar discounted comes directly from the practice owner. All of your costs, both fixed and variable expenses, typically remain the same but your overhead percentage increases. Many offices attempt to offset this by decreasing expenses; however, it is virtually impossible to do. If an office is producing $750,000 per year, and because of PPO participation now collects $650,000, how can that reduction be matched in cost savings?
Your team is the largest overhead expense in your practice, and it is never a team builder to reduce salaries. Even if you could reduce or freeze them, the small cost savings would be offset by dissension within the team and/or turnover. Trying to save money on supplies has long been a focus for dentists. The average office spends $40,000 to $45,000 per year on supplies. Price shopping to save 10% would only add a few hundred dollars per month, after taxes, to the bottom line.
Reimbursements may be remapped!
Dental offices must correctly report the procedures they do. But PPOs have the option to redirect or remap the codes for reimbursement purposes. For example, an office may report a three-surface posterior resin restoration. The PPO remaps that restoration to a three-surface amalgam for reimbursement. In another instance, periodontal maintenance (D4910) may be limited to two per year while reimbursing two prophies (D1110) for the four periodontal therapy cleanings submitted, even further confusing the patient.
Procedure intensity is monitored!
There are about 100,000 dental offices in several procedure databases from which insurance companies can purchase information. If you perform a given procedure at a higher percentile than others in your geographical area, your PPO might place you on focus review. If placed on focus review, you will be required to provide additional documentation and narratives to justify certain procedures. Failure to do so will result in claims not paid or even dismissal as a preferred provider of the program.
