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Kristan Palmer has specialized in insurance optimization for over a decade. She is the chief operating officer and director of insurance optimization at e-DentalMarket, a company that specializes in increased profitability through insurance optimization and in office savings plans. You can schedule a free consultation with Kristan for more information and customized guidance for your practice by visiting www.edentalmarket.com or calling 844.464.2777.
What all dental providers should know about insurance participation, factors that contribute to negotiation success and failure, and how to stay on top in the ever-changing insurance industry.
Evolution of PPO insurance
PPO negotiations quickly went from a little-known secret to a buzz word over the past decade. The process for successfully negotiating has also gone from simply being proactive and asking, to strategic leveraging of your existing and potential participation. In 2019, having more than four or five PPO contracts in place is likely limiting the success you see when negotiating, I’ll be explaining why.
Many practices try to negotiate on their own, others have hired out the services. In either approach, some see great success and others see little-to-none. What causes variation in success and the types of increases? You might want to assume it’s about the area you’re in, patient numbers, demographics, and saturation. The truth is, there is a LOT more to the why/how/where/when end of negotiations than you’d expect.
Understanding the leasing/shared network epidemic.
To understand how negotiations or optimization works successfully today, you need to first understand what is happening between these insurance companies that gives them the upper hand. The development we’re seeing is that leasing or sharing between carriers has expanded each year, resulting in hundreds of contracts between carriers, big and small. Sharing/leasing networks is basically a contract between two (or more) insurance companies that allows them to process claims in network through the other if you do not have participation directly. To further complicate this, in 2017 and 2018 we saw these arrangement morph into leasing that could actually supersede your direct contract. We’re now seeing leasing that can piggyback on other leasing, so leasing can be several companies deep. What used to be fairly straight forward in or out of network participation, has now become an entanglement of touching and overlapping contracts. This means practices have more and more participation through shared participation or leasing than what they initially agreed to. They also have more and more underlying options to remain in network should they terminate or opt out of current leasing. This underlying participation is hard to identify unless you are extremely familiar with how leasing works with individual carriers.
This is the difference between direct and indirect participation. Direct participation stems from signing a contract with a specific carrier, indirect participation stems from that specific carrier having one or more leasing contracts. In a nutshell, signing one contract could put you in network with a handful of additional plans, or as many as 200 all at once!
How does leasing limit or hinder negotiation success?
So why does sharing or leasing affect negotiation success? With overlapping options that not only keep you in network, but determine whose fee schedule to pay you from, the insurance companies have little incentive to increase for you.
Leasing was designed to automatically add more providers in network to specific carrier’s plans. Today, some carriers have over 10 to 12 options to be leased by other payors. Leasing, by default, takes place through the lowest paying fee schedule option. Recognizing defaulting leasing or options to take advantage of better leasing is when practices can see significant increases to in network fee schedules. When helping practices evaluate their participation or leasing, I often hear “we don’t have very many patients with that plan/fee schedule”. While this may be extremely true, and that plan may not be relevant when it comes to the bulk of your revenue, you must recognize every contract affects another. Many practices carry several contracts, not realizing these small plans can dictate how fees are set for larger, relevant companies also.
I like to compare insurance participation to a popular puzzle cube. There are nearly infinite ways to configure the puzzle cube and moving a piece results in a ripple effect, that in turn, moves several other pieces in the process. This is how insurance works. It’s extremely hard to be selective about what you are adding, removing or changing without it affecting several other plans.
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What options do you have?
First, it’s important to address the fact there is no go -to or cookie- cutter solution to follow. Every practice has different leverage, different options and different solutions in the end. Again, compare this to the puzzle cube, everyone’s cube is currently configured slightly different, so the strategy and process to fix it varies from cube to cube.
Leasing is continually expanding to benefit the insurance carriers, while putting dental practices at a greater disadvantage. As mentioned, with the changes in how PPO participation works and the infinite leasing options, negotiations are no longer about negotiating but rather optimizing your participation. Identifying leverage means having a clear understanding of who you are in network with and how. Both direct and indirect participation contributes to strategy when optimizing. The important thing to remember is you do have options to make improvements- seeking out some additional and customized information is a great first step.
Negotiating on your own versus professional help/services.
The most valuable leverage is understanding what leasing options are available to you, and there may be dozens. This is where hired help would benefit anyone with multiple contracts in place. There are some good options you can seek out for help in negotiating and optimizing today. As an insurance optimization specialist, I offer free consultations to all practices to explain how their current participation may be affecting goals to see higher fee schedules. I also assist in outlining a customized approach based on current participation and leasing options for practices to consider professional optimization help.
You may benefit from a free consultation if;