How to Safely Reduce PPO Write-Offs Without Leaving PPOs

Episode #597 with Dr. Tom Orent

It’s impossible to reduce PPOs. That's what your friends and colleagues tell you. But it is possible — they just don't know how to do it right! To teach you how to do it safely, Kirk Behrendt brings in Dr. Tom Orent, “The Gems Guy” and CEO of Freedom Summit, to reveal his proven strategies that will free you from your “PPO hell”. To learn more about how Dr. Orent can help you and your practice, listen to Episode 597 of The Best Practices Show! 

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Links Mentioned in This Episode:

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Main Takeaways:

Understand the true cost of PPOs to you and your patients. 

Don't go fee-for-service just to go fee-for-service. 

Remember that some PPOs will not negotiate. 

Learn how to reduce PPOs the right way. 

You don't need to leave all PPOs. 

Quotes:

“We get out of school, and we make the assumption that, ‘If I can be the best dentist I can be clinically, everything else will fall into place.’ Well, the truth is, if that's all you're focused on, everything else will fall — but not into place.” (3:38—3:50)

“One of the things I did was I went 100% fee-for-service. I decided that PPOs — that was the end of that . . . You don't want to do it haphazardly, as I mentioned a moment ago. So many docs make that emotional decision, and they say, ‘I hate,’ name any PPO you want, whatever it is, ‘I'm just going to pull out of it.’ And then, they end up getting hurt, financially, and patients leave in droves, and they're not prepared to do it. They're not prepared financially. They haven't prepared their team on how you speak to these patients, when should you speak to them, what should you say, how should you say it, and who should say it. There are so many pieces to that puzzle of doing it well.” (6:04—6:45)

“[I realized] we don't need to be 100% fee-for-service when there are two plans that are actually paying us well, treating our staff well, and the patients are great. So, I would never go fee-for-service just to be fee-for-service. I would do it because I'm being mistreated by the PPOs, if your fees are terrible, if the treatment they're giving you is terrible, if they're leaving your staff on hold for 30 minutes and then hanging up and pretending it didn't happen. One of our favorite people is a PPO expert with us, and his name is Ben. Ben told me that approximately 35% of all claims are denied or downgraded, not by a clerk, even — by an algorithm that just downgrades. Now, of course, the insurance industry will say, ‘We don't do that.’ But he said about 35% are downgraded or denied as an initial swipe just to get rid of half of the money.” (11:05—11:55)

“The average GP is losing anywhere from, low end, 25% write-offs, high end, 45%, even 50%, which is absurd. Just absurd. Now, where are we seeing 45% to 50%? Typically, that's in California, some parts of the Mid-South, and the Mid-Atlantic. But California is the worst offender. It's not at all unusual for a doctor to be writing off 43%, 45%, 48%, some 50%. We've run into a couple who are over 50%. So, you're working half a year for free.” (12:59—13:32)

“The more typical dentist is losing 30% [write-offs]. So, if it's a $1 million practice, $1 million production, which is a decent amount of production for one doc, it's a $300,000 write-off — $300,000. That's like a small practice. I mean, it's a small practice, but it's a small practice. It's $300,000. So, that's the surface cost. For a $1 million practice, it might be $300,000, $350,000, or $400,000. What about the hidden cost? Well, I've never yet spoken to a dentist who said, ‘Oh, I've already taken that into account. I realize that.’ And here's the hidden cost, financially. Let's say you're doing $300,000 worth of free dentistry — which, you are. It costs you 12% to 15% to produce it because you've got variable expenses. Variable expenses are lab and supply. On the low end, it's 12%. More typically, it's about 15%. That's $45,000, call it $50,000, that it's costing you out-of-pocket to give away $300,000 worth of dentistry. So, now, we're getting a little bit deeper. We've got $300,000 that you knew you were writing off. We've got $50,000 that you didn't know you were spending to write it off. So, the hard cost, financially, is $350,000. But it gets worse. There's not a practice out there that isn't spending a lot of money on staff to manage the insurance.” (13:36—14:59)

“Adjusted production is collectible production. [Dentists] always get mixed up, ‘Well, I don't know. We're doing $1 million.’ ‘Well, is that $1 million top line, or is that after write-offs?’ ‘Well, we don't do write-offs in our practice. We just put in the fee of the insurance company because it's too confusing, and it's quicker and easier.’ ‘You do, what?’ ‘Well, we have our staff just enter the network fees.’ That could be an episode in itself, but that is killing yourself. It’s killing every other doctor in your zip code, and it's blinding you to how much you're losing. I actually wrote a reverse formula. So, when we're working with a doctor trying to figure out what's going on, if they don't have their top line, we can figure it out for them in order to help them with a really close guesstimate to see what they're losing. And usually, that's the fuel that gets them started in the right direction.” (16:32—17:20)

“This is one of the seldom-spoken-about dirty little secrets within our profession. Nobody is proud of it, and it doesn't exist in every practice. There are doctors listening who can, rightfully so, say, ‘That's not happening in my practice,’ and I respect that 100%. However, what does happen in most practices is the doctors are painfully aware of what insurance will cover, what they won't, what they'll cover well, what they won't, and what they'll deny. And I've had many doctors tell me they won't offer certain services because they can't afford to, literally.” (18:24—19:01)

“I call it the devil and the angel effect. You walk in, and you're doing your assessment. You're looking at the radiographs, you're looking at photos, you're doing your probing, you're looking at all the teeth, trying to figure out what would be best for this patient. The angel is on one shoulder saying, ‘Tom, make sure that you offer the very best dentistry on each and every patient — no bias, no exception.’ That, by the way, is what we train our coaching members to do, and give them the ammunition to be able to do that, and get paid for it, and get the patients to say yes, even though a lot of it is out-of-pocket. So, angel, offer the very best. Offer what you would want done for yourself, your mother, your brother, your sister, your kids. The Devil is there saying, ‘Be serious. It's the real world. You're not going to get reimbursed for it, and the patient is not going to pay for it. Even if the patient would pay part of it, the insurance is going to downgrade it. And in the particular plan, you've signed a contract which says you can't balance the bill.’” (20:22—21:11)

“There are 43 different states, I believe, maybe 44 now, that have the Non-Covered Services Act. The Non-Covered Services Act says, ‘Hey, insurance companies. You have no right to dictate.’ The insurance commissioners were part of this, and the state, the dental societies, were really good for pushing on this as well to the legislators, and they finally got it passed in most of the states, this Non-Covered Services Act, which basically says if you deny this insurance company, then we can charge our patient the full fee, even though we're in-network. So, that's good. What's not good, and most dentists don't know, is 50% of the time, if you do that, even in a state that has that legislation, you will be committing insurance fraud at a federal level, not state. It's the state insurance commissioner that has the ability to say, ‘You can't do that, insurance company.’ And the legislation gave the insurance commissioner the teeth to say that. But there's about 50% of all plans that don't answer to your state insurance commissioner because they're federally funded.” (21:15—22:27)

“There are a lot of patients not getting the quality [of care] that they otherwise could get, just because we — when I say we, the dentist who is in a PPO — may make a decision not to offer certain things. But let's talk about the emotional cost on the doctor. I speak with so many docs who are so fed up, anxiety ridden, and frustrated that they know how to do the quality care, but they can't offer it, or don't offer it, or they do offer it and the patients aren't accepting it because they're just looking at their insurance. So, the emotional cost of PPOs — ultimately, it's a cost to the patient's health.” (22:37— 23:12)

“Ultimately, if you want to get out of PPOs, I would urge you to do it. If you don't want to get out, if things are fine, then don't change a thing. If you're doing well, financially, and you're doing great dentistry, and you've got great patients, and they're accepting of that care, and they're paying for it out-of-pocket, then — as I said in my dad's office, we didn't leave the last two plans. Thirteen, we did because they were terrible. Two of them were good, and we kept those.” (23:32—23:55)

“That's one of the biggest problems that we see, is somebody pulls out, they go fee-for-service, they destroy their practice, and then they rebuild by adding PPOs. And those PPOs give them the worst possible fees because now they’ve got them under their thumb. So, as far as moving forward, you mentioned that most practice management people see that practices will need to be some sort of hybrid in the future. I thoroughly disagree. It's going to be no different down the road than it is today.” (25:44—26:16)

“The vast majority of dentists will tell you that, ‘Even today, you can't go 100% fee-for-service. You just can't do it. You’d kill your practice, especially in our area. Tom, you don't understand. I'm in the deep bayou of Louisiana, and the people are poor. They don't have any money. They all have network insurance, and you can't do it here.’ Well, one of my favorite docs, Kurtis Zeringue, who's been with us for years and years and years, turned his practice 1,000% around, put away a big retirement — and all of this in one of the poorer areas, the deep bayou of Louisiana. I had a young lady in Socorro, New Mexico, Ginger Bratzel. Ginger said, ‘I'm thinking of maybe closing this practice, and then reopening somewhere else that would be more economically advantageous, and then maybe doing your program.’ I said, ‘Well, would you stay there if we can make it work where you are?’ She said, ‘Yeah. This is where I grew up. This is the indigenous [American] Indian population of the mountains of Socorro, New Mexico. These are my people. I don't want to leave, but I don't think you can do it here.’ I said, ‘Well, if we could?’ ‘Yeah.’ ‘Okay.’ She did great. She never moved. She stayed where she was.” (26:20—27:26)

“It doesn't matter where you are, and it doesn't matter how many dentists are in-network and tell you [reducing PPOs] can't be done. The reason that your friends and colleagues tell you it can't be done is because they don't know how to do it. That's the only reason they're telling you it can't be done. So, for somebody to tell you there will always — yeah, there will be a lot of hybrid practices. But that's because they don't know how to get out safely.” (27:44—28:06)

“The bottom line is, no matter what you negotiate, they're not going to give you a good deal. They're just not. So, if you think that, ‘Okay. Right now, my crown,’ and we're not supposed to discuss fees — FTC violations. So, let's say my crown fee is X, my whole crown fee, and I'm losing 35%. I'm losing 35% of my crown because that's my write-off. It's not like they're going to give you a 17% increase and, ‘Wow, that's not so bad. Now, I'm only losing close to 20%.’ That would still be terrible, but they're not even going to do that. They're going to come back with, ‘Yeah, we can give you 2%. We can give you 4%. We can give you 4.5%. Well, we’ll give you 4.75%’. Even if it's 5%, 6%, or 8%, or maybe you hire a PPO expert — and we've got a PPO expert with us — I'll tell you that negotiations is one of the services we don't recommend as often because it's a lot of money. Or you can try to do it yourself, and you're not going to get anywhere. But it can be done, and you can get better fees.” (29:03—30:10)

“I'm going to give you a little strategy that I used in my dad's office that worked like a charm. It'll work like a charm today, but it doesn't work very often. It only works occasionally. But when it does work, it's amazing. Which insurance company, and not by name, but what type of insurance company would absolutely negotiate before they would let you go? The answer to that is one that needs you. I think this is such common sense. Think about it. The only insurance company that will negotiate and give you better fees is one that needs you. Why would they need you? Because the ratio of number of employers and employees. So, they contracted with 200 employers, or 800 employees, whatever it is, in your area and they've got 10,000 patients, or 20,000 patients, or 100,000. It depends on whether you're rural, suburban, or urban. But the point is, they've got X number of patients under contract, and they've only got Y number of dentists, and the ratio is messed up for them and they don't have enough dentists. Why are some of the 800-pound gorillas refusing to negotiate? Because they don't need you. They simply do not need you. They never will negotiate. They just don't. They don't need you.” (30:51—32:06)

“How did I find out which [PPOs] will negotiate and which ones wouldn't in the Worcester office? Real simple. I never left a PPO until I could do it financially and it didn't matter if I lost every one of those patients. That's number one. We talked about that a little bit earlier. You want to get yourself in a position first. Then, when I was ready to leave, I sent them a certified letter, return receipt requested, saying — it was a very positive letter, by the way. It wasn't a negative letter. ‘I've appreciated working with ABC PPO. You guys have been great, and I love the patients, and it's all been good. However, unfortunately, at this point, I can no longer afford to offer uncompromised care.’ And this is the key. This is what we tell our patients as well. ‘I can no longer afford to offer the uncompromised care that we deliver with the compromised fees that we're getting. And so, please see addendum A. Addendum A is our new fee schedule.’ You’ve got to play hardball, but you can only do it if you're willing to cut and run completely.” (32:07—33:12)

“As I was cutting and running, I sent this [letter] out as a shot over the bow. At the end of the letter, it said, ‘If you are unable or unwilling to work with us on the new fee schedule, then please consider this.’ Let's say it was a 90-day notice for that company. ‘Please consider this our 90-day notice.’ It was return receipt requested, and we had the date that they had signed for it. So, we had proof that we had given our notice. About half of them, maybe 40% of them — and today, it might be only 20%. So, that's the biggest difference, is there are fewer who need you now. Back then, not as many dentists were tied into PPOs. But the same strategy will work to figure out who. But don't use this strategy unless you can financially afford to walk away. Having said that, many of them said, ‘Yeah, we don't want to lose you.’ What they're saying is, ‘We don't have enough dentists in your area.’ And so, they either gave me that schedule, or they gave me a little bit of a compromise, ‘Well, we can't do schedule A, but we could do 10% less than that. Would you take that?’ I said, ‘Sure, let's do that.’ Eventually, we left all but two. But for a while, on the way out, we were collecting way more money. You follow that? So, I still left. I didn't promise them I was going to stay. I just said, ‘Pay us this, or we're leaving now.’” (33:13—34:28)

“Unfortunately, only about half of the dentists out there that we speak to have a sufficient understanding of the umbrella networks. For those who've never heard it called an umbrella, you can also hear it called shared or leased networks. Leased, shared networks, or umbrella networks. So, there are three different names that these evil things go by, and they're terrible.” (34:44—35:06)

“Mrs. Jones shows up at the front door — a super nice lady. Shows her insurance card. She's in some insurance plan, but it's not one of yours. So, you're not in-network with her. She's going to be full fee. She broke a couple of teeth. She's got some decay. She agrees to do the care at full fee. You prep the two crowns, and maybe did some build-ups, and maybe a little bit of whatever. You submit, say it’s $5,000. I don't know how many different services we're bundling into that, but let's say it was $5,000 worth of services that you assume are full fee, and she was fine with full fee. You submit for her, and the EOB comes back, and it says you are required, by contract, to write off not $500 of that $5,000, not $1,000, but $1,500 or $1,800. It depends on what your insurance is. You could lose $1,800 of what you thought was a full paying patient because you're not in-network with her plan.” (35:20—36:15)

“If you read the fine print — the little five-point or seven-point pica print of your contracts, what you're going to find is this phrase that says something to the effect of, ‘Oh, and, by the way, we may be in a behind-the-scenes arrangement.’ It’s like the airlines. You get onto a flight. You're sitting at the gate, and it says American Airlines Flight 456. That's what you have a ticket for. And then, the marquee changes, and it says some other name of some other company...