Just as the Axe Needs Sharpening, the Tools of the Trade Need Updating

Submitting the right dollar amount to the right plan at the right time

By Tom Limoli

The ultimate tool of the crime fighter is not the sidearm, vehicle, communication device or partner – but is, in fact, the lowly pencil. The same is said of the firefighter’s reliance on the pick axe. Just as the firefighter must control ventilation, the crime fighter must control and manage the flow of documented information. Your dental practice is no different; control and manage the ventilation and you conquer the fire. Understand the significance of your practice numbers and conquer your market share.

Computer data can be your best friend or your worst enemy. The old saying of “garbage in equals garbage out” is true as it comes to dental practice management software. If you are adjusting dollar amounts to satisfy the accounting of participatory benefit plans, your software is not working for you – you are working for it. It is important to submit the right dollar amount to the right plan at the right time.

Right Amount
Does the benefit plan want you to submit the patient’s claim with your usual unrestricted fee or some variation of a participatory reduced dollar amount? If you are submitting your usual fee, do you have to individually adjust the patient’s account, or does your system automatically account for the discrepancy in dollar amounts? Most all of the major dental practice management software programs have the ability to generate the claim at your full usual fee while accurately accounting for only the participatory maximum.

Right Plan
Does your automated practice management system know which plan is assigned to which patient? Remember that plan specifics are based on indexing the employer, not the insurance company. An individual employer may have several benefit plans, but insurance companies have thousands. The individual patient record is assigned an individual benefit plan.

Right Time
Does your automated practice management system know when to generate the claim? Can you submit the claim for the crown on the date of preparation or do you have to wait until cementation? This is a plan specific issue and has nothing to do with the terminology on the ADA Claim Form. Never submit a claim for benefits until the procedures is completed.

Sometimes the Numbers Just Don’t Add Up
From an accounting perspective, a write-off is identified as an uncollectible debt. With your current “cash” (as opposed to accrual) system of accounting, when a patient pays you $100 that amount is considered income and is taxable. In the unforeseen event of a problem with the previously collected payment (bounced check, etc.) it may be later identified as a write-off. In other words you had it posted as taxable income but later it was lost.

Have you ever heard your contemporaries make one of the following statements?

• “If we were not a participating provider for ABC Dental Plan, we would not have had to write-off all those crown buildups.”
• “Our office lost money because we participate with ABC Dental Plan.”
• “Look at all the money you are losing by participating with ABC Dental Plan. Those write-offs should be going into your pocket, not the insurance company’s.”

The term write-off has inaccurately been associated with that which occurs when your usual fee in the open, unrestricted marketplace is $1,000, and the plan’s maximum under a participatory contract is only $800. Did you lose $200 doing the procedure? Or was it never income in the first place? Do not rely solely on the total dollar amount of financial adjustments to determine the stability and profitability of your plan participation.

My intent is to be nonjudgmental concerning participation with dental managed care plans. Take out the emotion and deal with the reality of hard numbers. Never join or participate in any managed-care plan (PPO, CCD, HMO, Referral Network, etc.) that contractually reduces your usual fee, unless you need patients to fill empty chairs. Why do a crown today for $800 and make a full fee $1,000 crown patient wait weeks for an appointment?

Are You Making Money With The Plan?
Rather than looking in disgust at that number you are identifying as insurance write-offs, consider looking at your appointment book and bank deposit. Participatory plans deal with time and money rather than procedure and money.

Start the process: Select an individual participatory plan. Determine how much money the plan paid you. Add to that number the total dollar amount those patients directly paid you for covered as well as non-covered services. Lastly, determine what percentage of your total gross revenues came into your practice as a result of your participation.

With that percentage number in hand, determine how much appointment time went to those participatory patients. If 30% of your gross revenues came from XYZ Dental Plan and their patients in your practice, how much chair time did it cost you? If you invested (or sold) 20% of your chair time and got 30% of your revenue – congratulations, you are making money! But if 40% of your time is generating 30% of your revenue, you have a problem.

Consider modifying the templates in your schedule to better track and forecast a more accurate production number. Production is not a real financial number, as it has no tax consequences. Revenue blocks per plan per week may be your answer. Delegate and control your time based upon your percentage of anticipated plan-driven revenue. Track your production by both participatory as well as non-participatory plans. A well designed appointment book deals with three levels: chair, procedure and doctor time.

Hard Numbers
Scrutinize the following specifics in your office:
• Utilization Reports
– Frequency
– Total dollar
– For what are they paying?
• New Patient Data
Are patients coming to you because of your willingness to accept authorization for payment and wait on the check from the plan? This is a tough question to ask yourself. Patient loyalty is one thing, but the family financial budget is another.

• How many new patients are plan-dependent?

• Why and how are new patients coming to your practice?

New patient flow is the lifeblood of your practice. Qualify the new patient parameter not with just a comprehensive evaluation and diagnostics. A new patient is not quantified until the first phase of the treatment plan is initiated. The same goes for emergency treatments. They do not count as new patients until the treatment sequencing begins. Make sure your new patient number is accurate. Since most all participatory plans will not directly pay an out-of-network provider office, new patients may be hesitant to pay the total cost out of their pocket

• Contract Considerations

Find your original signed contract. If you don’t have it, get it. This information will tell you where your money is going.

If you decide to get out of the plan, don’t write patients a form letter as it may make your office look selfish and greedy. Have the courtesy to tell the patient face to face at their next visit. Your benefit plan exit strategy should rarely be shorter than 18 months.

With participatory plans, never have open patient accounts receivable. These patients pay their dedicated portions prior to or at the time of service. No statements or invoices are ever issued to patients with reduced dollar participatory plans. Remember, you agreed to contractually accept a reduced dollar amount for the completed procedure in exchange for the reduction and/or elimination of administrative aggravation.

Your point of control for the accountability and overall profitability of any and all participatory plans must be limited to your appointment book and automated practice management system, never the operatory.