Taking control of choosing your insurance model

It is becoming increasingly more important for dentists to keep track of dental insurance.

Michael Perry, DDS, founder and president of Momentum Dental Business Consulting, led a course at CDA Presents The Art and Science of Dentistry in Anaheim last month that gave dentists an idea of how they can choose the appropriate insurance model for their dental practice rather than “letting the model choose them.”

“Insurance contracts are chosen to obtain access to pools of patients, each type has strengths and weaknesses,” Perry said during his lecture titled The Impact Dental Insurance has on Your Practice. “One type is not inherently superior to another.”

Perry, who also serves as the chair of the CDA Practice Support Center Task Force and is a member of the Dental Benefits Research Task Force,  stresses that there are three stages of practice: survival, growth and fulfillment. He defines survival as the time when a private practice dentist is burdened with debt. Growth is the time when the practitioner’s priority is practice expansion. Fulfillment is when the practice becomes “turnkey” and is facilitating a doctor’s definition of success.

The level of dental insurance remunerations varies significantly between insurance plans (pure fee-for-service, PPO and HMO), according to Perry. Rules that restrict treatment options and outside charges to patients also have wide variations. These variations can create an almost infinite number of model variations, but Perry focuses on four specific models. 

“I like to break down the relationship with dental insurance into certain categories that I call models of practice depending upon how much contracted insurance you have,” Perry said. “You’re assigned to a specific model and your cost of doing business changes depending upon that model.”

Below are his models:

  • Model 1: Hybrid – 2/3 fee-for-service, 1/3 PPO.
  • Model 2: Hybrid – 1/3 fee-for-service, 2/3 PPO.
  • Model 3: Hybrid – 1/4 or less fee-for-service, 3/4 or more PPO and/or HMO.
  • Model 4: Pure fee-for-service.

Each of these models have variations in terms of staff costs based on the level of training the front staff, registered dental hygienists and dental assistants have.

“The greater the proportion of managed care dentistry in a practice, the more production is necessary to achieve a given net profit,” Perry said. “The more managed care in a practice, the greater the need for control of variables related to time.”         

The Practice Support Center’s website, cda.org/compass, has several examples related to variables and production requirements in each model.        

Perry also laid out questions dentists can ask when considering signing up for a PPO plan, such as:

  1. How many patients will it provide?
  2. Will it force you into a different model?
  3. What are the contractual guidelines?
  4. Do the fees make economic sense?

“The participants had a chance to learn a little bit more about how they, like it or not, are making a choice with contracted insurance and that choice affects a number of their business systems,” Perry said.

For more information on creating a vision and strategic plan when it comes to dental insurance, look for the Effectively Utilizing a Vision Statement in the Dental Practice resource on cda.org/compass.