Umbrellas and PPOs: Making the Most of a Rainy Day

Participation optimization can potentially increase PPO reimbursements, and sometimes, it can positively impact PPO revenue more than contract negotiations. What is it, and why is it important?

To expand in-network access for members, PPO insurance carriers enter into shared-network agreements with one or more insurance carriers. Also called “leased provider panel” agreements, it gives their members (patients) access to more in-network dental providers. Another way they expand in-network access is through umbrella network companies, in which multiple PPO insurance carriers and insurance plans fall under or use the umbrella network’s provider network. In some states, the only way some PPOs can provide in-network access is through an umbrella network company. Most umbrella network companies contract with the payors (i.e. PPO insurance carriers) and the dental providers. The PPOs agree to reimburse contracted dental providers according to the umbrella network’s fee schedule.

Shared network agreements between PPO insurance carriers and umbrella network companies can provide higher levels of reimbursements; however, shared network agreements and changes to these agreements can cause confusion, fee schedule payment issues (especially if a dental provider is contracted with multiple umbrella network companies), and concern if dental providers have to participate with payors they didn’t intend. Participation optimization is taking steps to avoid unwanted participation when network arrangements change as well as managing the resulting reduction in reimbursements.

For dental providers who don’t participate with PPO insurance plans yet, an umbrella network company may offer the desired PPO participation at a higher level of reimbursement than what the PPO insurance carriers offer through direct contracts; however, dental providers must also understand and consider the associated negatives.

Dental providers that already participate with PPO insurance through direct contracts and through umbrella network companies may be able to adjust their participation to take advantage of shared network agreements, but it’s unlikely an existing contract will be terminated. Payors can prevent shared network arrangements from applying to certain dental providers or certain PPO plans.

The following steps can help identify opportunities to optimize PPO participation:

  • Research the PPO insurance plans in which you currently participate. Provider relations representatives and network recruitment specialists can explain which payors participate in shared network arrangements and provide a fee schedule proposal or a copy of your current fee schedule.
  • Identify your current in-network PPO plans and how you participate (or plan to participate) with each payor: through a direct contract, a shared network agreement, or an umbrella network company. Create a participation map. Be sure to note instances where a payor participates in more than one shared network agreement or is included under multiple umbrella networks. This is one of the keys to identifying possible optimization opportunities.
  • Analyze reimbursement rates and compare using your most utilized or top-grossing procedure codes. Determine which plans provide the greatest number of in-network patients and at the highest levels of reimbursement.
  • Exhaust negotiations with contracted PPO insurance carriers and umbrella network companies. Consider other factors, such as eligibility for future negotiations, before finalizing your optimization plan.

Dental providers must continually evaluate their PPO participation. While optimization can lead to an increase in PPO revenue, it can also lead to negative or unintended outcomes if done expeditiously and without fully understanding network relationships and policies.

About the Author: Mike Alder is President/CEO of Unitas Dental. He received a degree from the University of Utah, while studying to enter dental school. After graduation he was brought on full-time at a small medical device company where he developed the business for 25 years. When one of his sons entered dental school, he wanted to better understand the dental industry and took interest in the relationship between dental provider and PPO insurance companies.