A Step-by-Step Guide to Dropping HMO & PPO Plans Successfully

Greg Winteregg, DDS Vice President at MGE Management Experts - A Step by Step Guide to dropping HMO & PPO Plans - The MGE Blog

Are you tired of writing off 20, 30 or 50% (or more in some cases) of your fees due to PPO or HMO participation?  Have you ever wondered if there was a “way-out?” Or maybe you’ve thrown up your hands and decided that this is just the way “things are,” and you have to learn to live with it.

In any event, participation in managed care – if not handled properly – can be rough or downright brutal to your bottom line. And you may have wondered (or dreamed): Is it really possible to get out?

A Step by Step Guide to dropping HMO & PPO Plans - The MGE Blog

Well…you can. And if anything, even if you don’t drop all plans, you can manage this area so it doesn’t become all consuming – or devastate practice profitability.

The Way Out

When and how you get out really starts with looking at the numbers.

I’m not anti-managed care or anti-insurance. I’m anti-rip off. And it’s very sad for me to sit down with doctors who are doing dentistry for 50% of the usual customary fee in their area and struggling to pay their staff (let alone themselves).

In the late 1990s here at MGE we ran a very successful marketing campaign with the tagline, “Get out of managed care.” In one week, that got 254 postcard responses.

But by the time 2004 or 2005 rolled around, we’d be lucky to get two responses. It didn’t work anymore.

Now, I’ll give you my opinion, but I think the data backs this up. I think the profession just went into complete apathy and just agreed with the idea that, “You have to participate in managed care if you’re going to practice dentistry in this century.”

I can tell you for a fact that is not true.

Hundreds of my clients are very successful and don’t participate.

I also have many other clients who are successful, and they take a few plans. So, you don’t want to just drop plans randomly just to do it or because somebody said so.

A Step by Step Guide to dropping HMO & PPO Plans - The MGE BlogYou have to evaluate the numbers and make a business decision.

If you are participating in any plans at all, I’m going to give you a few things to do.

  1. List out every plan you participate with. Just write them all down.
  2. Take a look at how many patients are in each plan and what’s the total number of patients you have in your patient base with that plan.
  3. Find out how many new patients are coming in from this plan every month.
  4. Evaluate the total amount of collections per month (or possibly per year) per plan.

Now, the next number is a number you may not want to confront:

  1. What are the write-offs for each plan?

Now, when I normally ask a doctor how much they are writing off for PPOs, HMOs, Medicaid, etc., the answer I typically get is: “I don’t want to know.”

Well, we’re not going to be an ostrich and stick our head in the sand on this subject. Using the information from above, let’s do an evaluation to see if:

  1. You should get out and,
  2. If you decide to, how to get out.

So, take the time you need to gather the information. Give it over to one of your staff to round up this data if you need to. Then continue with this article.

Crunching the numbers

Now I want to look at gathering up all of the numbers from earlier and really start to evaluate it. Now as you’re comparing plans, there are three main numbers A Step by Step Guide to dropping HMO & PPO Plans - The MGE Blogyou want to look at:

  1. First how many patients are in the practice on this particular plan. I’ll use the fictitious name of “ACME Insurance Plan” as an example.
  2. How many active patients do you have and how much money are you collecting monthly and/or annually from the ACME plan.
  3. And what is the write off percentage? This is a bit of a nebulous calculation and you’ll have to use your computer and maybe a spreadsheet or two to try to zero in on an exact percentage. There are usually going to be a couple percentages, one with regard to hygiene services and one with regard to restorative services.

If that’s hard then grab three fees: a prophy, scaling and root planing and a crown. What are you writing off for each?

Now you’ve got a bit of a balancing act. You have the information now with the insurance providers, number of patients, the dollar amount of what’s collected annually and monthly, and the write-off amount.

And, let’s look at a worst-case scenario. You have an insurance provider where you only have 50 patients in the plan. Only 25 showed up. Last year you collected $3000 from those 25 patients. And you’re writing off 50%. That’s one you can drop right away with no impact on your practice.

Now a plan at the opposite end that you would probably want to keep is a plan that has 500, 600 or 1000 patients, and your restorative write off is only 10%, and your hygiene write off is 20%, and this plan accounts for 25-50% of your annual income. Keep it!

Again, I’m not anti-insurance; I’m anti-rip off. And this plan isn’t a rip off. There’s no reason to drop it.

So, between those two extremes, there are going to be all different kinds of gradients. And this is a decision that you’re going to have to make, and maybe your accountant can help you. I suggest that you start dropping the plans with the least revenue generate from them and the least number of patients (and the highest write off). Then you can start to stair-step them on up.

However – keep in mind when you drop plans – you may lose some patients. You don’t have to – but there will be some drop off. Some won’t care and come anyway – but again this requires a good handling. You’d be surprised how many patients think that they “can’t see you anymore” if you’re no longer participating in their PPO! Sure they can see you – it will just cost them a little more. And you’d again be surpised how many people are fine with this!

Dropping Plans

Now let’s talk about dropping plans. At MGE, we’ve helped hundreds of clients drop managed care plans in an intelligent manner, so as to increase profitability and reduce stress and hours. We can absolutely do the same for you. Call us at (800) 640-1140 or click here for a free consultation.

Now here are the basic steps you need to follow, whether you use our help or do it alone.

  1. Don’t drop all your plans at once. Do it gradually.

The last thing you want to do is jeopardize your practice by dropping everything all at once. No, no, no, this needs to be done gradually.

I want to make it very clear that this is not something where you just get inspired one day and decide to bail out on all your plans. This must be done sequentially, and you must have some basic things in place before you drop your first plan.

  1. You MUST play by the rules. Read your agreement and then do what it says.

A Step by Step Guide to dropping HMO & PPO Plans - The MGE BlogIf you are contracted for another six months or year, then complete those terms. Don’t violate your contract. Continue to honor the terms of the contract until it is done. Give the insurance provider warning if that’s stipulated.

In some states you must write a letter to the patients – so write a letter! And when you do write the letter, keep in mind what I discussed earlier: word it in a way where it’s very clear that you’re dropping the insurance plan, you’re not dropping THEM. You would love to keep them as a patient. It’s just that you’re not going to file the insurance for them or the fees will be a little bit different, etc. Have them come in for their next hygiene service, explain it all to them.

If this is done properly, we’ve found over the years that you’re only going to lose 25-30% of these patients. Now when patients leave keep them on a newsletter, because there’s always a chance they’ll come back after trying some other dental offices. You wouldn’t have them on active recall anymore if they’ve left the office – but no reason to drop them off the newsletter list. For that matter – I’ve seen this as a fruitful source of patient reactivation even after they’ve left the office.

  1. You must have a solid marketing plan and something happening to be getting more fee for service new patients before you get out of your first plan.

Confront this number that you’re writing off. I’ve seen it as high as 50%, but on average it might be more like 20%.

So, let’s say that number is $15,000 per month for ACME insurance plan. That’s your marketing plan. That’s your marketing budget.

You participate with ACME and you surrender $15,000 for them to send you patients. That’s a very, very costly marketing plan.

For a $15,000 you could hire a full-time PR person for $3,000 per month and then have lots of money left over to advertise.

We usually recommend a marketing budget somewhere between 3-7% of collections. That’s much cheaper than writing off 20-50%.

So first of all, you must have a marketing plan that’s working. There must be some sort of internet presence, an internal referral program, possibly direct mail, etc. Something so that when you drop these plans and lose some new patient flow from that, you’re getting new patients in to replace them.

We have the New Patient Workshop at MGE that comes with a money-back guarantee. You should definitely call and do the New Patient Workshop to help you develop a plan to get more new patients. Right now we’re running a special offer on the New Patient Workshop of just $499 with a money-back guarantee.

  1. Train the front desk to answer to convert phone calls into new patient appointments.

Now that you have the phone ringing from your marketing, you have to have proper training for the people answering the phone. When you’re not participating in a number of plans, you need someone who can “sell” the caller on coming into the practice. So there has to be proper phone techniques and your staff can do that training from the comfort of your own office with our online training platform: www.ddssuccess.com.

  1. Implement a new scheduling system to allow more time for new patients and case presentations.

You also need to be able to handle the new patient flow in your schedule. If the patient has to wait 2 or 3 or 4 weeks to get in for an appointment, most likely they aren’t going to show up.

Usually people call on a “brave” day, and then if they wait a few weeks they’re not so brave anymore and won’t show up. So, you should learn my scheduling system that will enable you to get these patients in within 24-48 and generally help you run a more productive and efficient schedule. This system is also available on our online training platform at www.ddssuccess.com.

  1. You need to be able to “close” patients on their treatment plans.

And finally, you have to be able to close cases. You need to be able to get the patient to sign up for what they need and not just what the insurance covers. Otherwise you might as well just stay on the plans. This is really the key here.

MGE clients do nine full days of training just on communication and presenting and closing cases at the MGE Communication & Sales Seminars. I think attending these seminars is a must if you want to drop managed care. Call us at (800) 640-1140 to sign up.

As an additional point here, you also need enough time on the schedule to present treatment plans thoroughly and address the patients concerns, so you can actually close them on it. With fee-for-service, they’re generally going to be paying a little more out of pocket and you need to spend some more time with them to help them understand why it’s necessary. Again, building this time into the schedule is part of my scheduling system on www.ddssuccess.com.

So a few basics are:

  1. Drop plans gradually
  2. Play by the rules
  3. Have an effective marketing plan to get new patients coming in to replace the ones you are about to drop.
  4. Train the person on the phone must be able to handle that phone call properly.
  5. Have room on the schedule to fit them in within a day or two.
  6. Learn how to present treatment more effectively and get the patient to sign up for the treatment they need (not just what insurance covers).

So those are the basics. I hope it helps!

Again, we’ve helped thousands of clients transition into fee-for-service practices with better profitability, less stress and fewer hours. We can absolutely help you do the same! Give us a call at (800) 640-1140 or click here to schedule a free consultation today!

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