Is PPO Optimization More Effective Than PPO Negotiation?

Is PPO Optimization More Effective Than PPO Negotiation?

Every dental practice that participates with PPO dental plans feels the pressures of compressing reimbursement while the costs of running a practice continue to accelerate. That trend is expected to continue for the next several years as payers get better at using multiple networks at the same time.  

There are a number of companies offering Dental PPO Negotiation, and demand is so great that many are operating with 3-to-6-month backlogs. This sounds like a great business; just build a team of folks that makes an inventory of every network that a practice participates in and ask for an increase. Sure, it takes a lot of time for someone to work the process and I’ve had payers drag it out for up to 8 months just trying to get an increase approved.

Example 1 below is a practice where four of their payers are directly contracted. After going through the process of reaching out to each payer (insurance company), the practice received 3 increases. Each of these payers have also imposed limits on how frequently a practice can ask for an increase. The reason is to ensure that your practice’s fees will ALWAYS increase less than trend.

In this example, the annual impact of the increased fees is $8,383. That doesn’t feel very significant and yet a practice that doesn’t ask for increases for a decade will never get to make that up. Their revenue will always be less than their peers for most payers.

PPO Optimization looks at reimbursement from a different lens.

• What networks does each payer use?
• What order are they using them?
• What is the potential patient disruption for each move?
• Is there an opportunity to use this knowledge to reverse the network game?

Example 2 below is the Dental Basket (weighted average of the 15 most frequent services by specialty) of each fee schedule.

A payer using a stack of multiple networks tends to use their direct agreement first, then network swaps, then networks leased. Looking at Ameritas, they use their direct network and have swaps with Aetna, Guardian, and Principal.  

Now let's look at what this would look like for the practice.

PPO Optimization for this practice led to joining of two networks (Connection Dental and Zelis) and terminating the direct agreement with Ameritas, Guardian, and Principal. Not only will that mean less credentialing but also a significant increase in reimbursement.

A 3% increase in Aetna fees is the same as in the PPO Negotiations, but the magic is moving reimbursement for patients to the practice’s advantage.  

• Aetna patient reimbursement stays under the Aetna agreement
• Ameritas patient reimbursement moves to the Connection Dental or Zelis agreements
• Guardian patient reimbursement moves to the Aetna agreement
• Principal patient reimbursement moves to the Zelis

To summarize this example, PPO Negotiation was an $8,000 annual impact and PPO Optimization was $62,000 annual impact across these four payers. After optimizing over 500 practices this is common result, though the specifics of the strategy is specific to each practice.

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