Dental PPO participation: factors to weigh before you sign

A dentist who joins a PPO agrees to a network’s fees and rules. In return, the plan lists the dentist for its members. The choice changes revenue, workflow and the patient mix, so it deserves a careful look at the contract and the practice’s own numbers. This post lists factors to weigh. It does not tell any dentist to join or leave a plan, and it is not legal or financial advice.

What is a dental PPO and what does participation mean?

The ADA defines a preferred provider organization (PPO) as “a managed care plan combined with a network of dentists under contract to the third party carrier to deliver specified services for set fees according to the provisions of the contract.” Traditional PPOs “pay a percentage of the maximum allowable fee to the contracted dentist.”

Joining is called PPO participation, and a dentist who joins is in-network for that plan. The glossary entry on the dental PPO gives the short definition. The ADA also notes that “when a dentist signs a participating provider agreement, they agree to abide by the dental plan’s processing policies.” That sentence is why the contract itself matters as much as the fee list.

What does the ADA advise before signing?

Read the contract closely and measure it against your own practice. The ADA states: “When you receive a dental insurance contract, you should read, understand and evaluate it thoroughly to determine if signing the contract is a sound business decision.” ADA members can use a free contract analysis service, and the ADA Third Party Payer Concierge answers insurance questions for members.

The ADA also says a dentist may “negotiate the terms of your insurance provider agreement prior to entering into your agreement and/or when it comes up for renewal,” and may negotiate reimbursement rate increases. It adds that this negotiation “should be done individually, between only you (or your attorney) and your plan, and not with or on behalf of other dentists.” Ask an attorney what that means in your situation.

Which factors should a practice weigh?

No single factor decides the question. The table groups the factors that appear in the ADA contract guidance and in standard practice finance. The right-hand column is a prompt for your own numbers.

Each row comes from a clause type that the ADA discusses on its contract issues page. For instance, the ADA warns that card payment methods can add fees “often 2% to 5% per transaction,” which “effectively reduces your contracted reimbursement rate.” It also describes “affiliated carrier clauses,” where a third-party insurer may gain access to the rates, and it advises asking for written notice and a right to opt out before that happens.

How does the ADA describe plans that limit out-of-network care?

The ADA FAQ describes exclusive provider organization (EPO) plans, which “are very similar to PPOs but require that patients use only participating dentists for services covered by the plan.” Under an EPO, “there is no benefit payable to an out-of-network dentist.” A dentist who is out-of-network for such a plan may see patients leave, because the patient bears the full cost. The out-of-network dental practice post covers that side.

What about ethics and billing?

Network contracts touch the ADA Code of Ethics on fees. The Code says that “it is unethical for a dentist to increase a fee to a patient solely because the patient is covered under a dental benefits plan.” It also says that accepting a third-party payment under a copayment plan as payment in full, without telling the third party that the patient’s share will not be collected, is overbilling. The ADA contract page makes the same point about routinely writing off copayments. Ask your attorney how your contract language and your collections practice fit together.

How can a practice test the decision with numbers?

An owner can work through a short set of steps with a CPA:

1. List each plan’s share of patients and of revenue.
2. For common procedures, compare the plan fee with the practice’s fee schedule and with the cost of delivering the care.
3. Add the cost of claims work, including the hours your team spends on claims and denials.
4. Model the schedule if a plan’s patients left, and ask how fast open chairs could fill.
5. Read the exit terms, and ask an attorney what happens to treatment in progress.

The PPO participation decision guide goes through this in more depth. Do not rely on a rule of thumb for the “right” share of PPO patients. No published standard sets one.

Next step

Read the PPO participation decision guide for the full framework, then bring your contract and numbers to an attorney and a CPA. To discuss practice finance topics with Dr. Jon Copeland, DDS, a general dentist in Wildwood, Missouri, contact Dr. Copeland about consulting.