How Safe is Your Practice Revenue from Claims Repricing?

by Patrick O'Rourke
Blog

Claims Re-Pricing = Identifying the Lowest-Cost Method of Reimbursement

Identifying the lesser of pricing involves the comparison of various rate calculations to determine which results in the lowest payable amount. Here are three examples that have been used to pay dental
claims for decades:

  • Lesser of Submitted Charges
  • Lesser of Usual & Customary Rates (UCR) Allowable Percentage by Percentile Value
  • Lesser of PPO Contract Allowable Amount

Claims re-pricing takes it further by factoring in addi%onal PPO contracts that may be available to for
the payor to access:

  • Lesser of Submitted Charges
  • Lesser of Usual & Customary Rates (UCR) Allowable Percentage by Percentile Value
  • Lesser of PPO Contract Allowable Amount – Direct Contract
  • Lessor of PPO Contract Allowable Amount – Shared Network
  • Lessor of PPO Contract Allowable Amount – Leased Network

How it Works

A new patient comes in to Clean Mouth Dentistry with Acme Dental Insurance. Clean Mouth is a
participatng provider with six dental plan networks. Acme Insurance does not have a direct contract
with Clean Mouth, though has access to two of the networks currently contracted via a Silent PPO
arrangement: Care PPO & Connetwork.

Clean Mouth staff is expecting to collect a total of $257 – their standard fees for a comprehensive oral
exam, complete series of x-rays, and a routine adult prophylaxis.

During the benefits verification process, it is learned that Acme has the practice listed as a participating
provider through the Care PPO contract. This reduces the amount collected to $197.

 

 

 

 

When the claim is received by Acme claims department, it is processed through adjudication software
that calculates the lowest possible reimbursement available for all three services combined.

 

 

 

This results in a loss of revenue of $80 for Clean Mouth Den6stry.

It is important to note that each of the contracts are in play and the lesser fee(s) will be paid based on
the total cost of procedures performed that day. Perhaps the patient comes back for a crown. The
Connnetwork fee is $1000 and the Care PPO contracted rate is $850. Guess which amount Clean
Mouth will be paid?

Even if the practice was aware that Acme Insurance considered them a participating provider through
Care PPO, they still take a 10% hit from the assumed discounted rate when it is re-priced through the
other network contract.

If the practice submits the assumed Care PPO contracted rates instead of their standard office rates,
the reimbursement will be even less. The claims adjudication system will automatically default to the
lowest cost.

 

 

 

In this scenario, Clean Mouth spent $80 to bring in $155 – which is 60% of their standard fees. If their
overhead is 65%, the business just lost more money than they made.

What You Can Do About It

  • Always file your standard rates. Keep them updated and aligned with your local market.
  • Read all credentialing documents and mailed correspondence carefully. Keep in a secure location.
  • Protest, in writing, any involuntary amendments made that will cannibalize established patient base.
  • Assess whether being a participating provider with each network is in your financial interest.
  • Utilize a company that specializes in PPO contract analysis and negotiation.

The stakes are high. Imagine if 10% or more of your patient base have benefits through Acme Dental
Insurance.

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