Episode 105: Is it Possible to Negotiate Your Fee Schedule With Dental Insurance Companies?

Naren: This is the less insurance dependence podcast show with my good friend Gary Takacs and myself Naren Arulrajah. We appreciate your listenership, your time and most of all we appreciate your intention to reduce insurance dependence in your practice our goal is to provide information that will help you successfully reduce insurance dependence and convert your practice into a thriving and profitable dental practice that provides you with personal professional and financial satisfaction.

Gary: welcome to another edition of the less insurance dependence podcast I’m Gary Tackacs your podcast co-host along with my great friend Naren and we have an amazing topic for you today. You might have seen it in the headline but let’s start right off with that. It’s titled “is it possible to negotiate your fee schedule with dental insurance companies”. I think you’re going to really enjoy that topic. Hey before we get to that topic though, a quick announcement. Coming up at the time that this is being published, it’s about a week away. We have our very next thriving dentist one day MBA workshop. However, in this case as you know we’re doing these live streams. The next one is spread out over two half days. So, it’s a day of content spread out over two half days. It’s Friday October 23rd and Saturday October 24th. In that thriving dentist MBA live stream, I’ll share with you the 10 elements of a thriving practice and it truly is a workshop. We have 11 different exercises we walk our attendees through and the exercises are all designed to make this information come alive and to help you apply all the information in your practice and one of those elements just one of the 10 is to help you successfully reduce your insurance dependence. So, we know if you’re a listener to this podcast you’re going to love the one-day MBA because we go into a much deeper dive about what to do to successfully reduce insurance dependence in your practice. Hey you can go to thrivingdentist.com/mba for more information or to register. You’ll notice that tuition is very attractive because we do these things in live stream format, we no longer have airfare and hotels and meeting room and catering expenses, so we’ve made it very affordable.  These do sell out. There is currently there are currently seats available. Go to that page and find out if we still have seats available and come join us if for some reason, it is sold out, look in the schedule to see if a future one works for your schedule. Look forward to seeing you in that thriving dentist MBA workshop. Well Naren, we’ve got a fun topic and I know you’ve got some perspective on this. What do you think about the interest among our listeners of whether we can successfully negotiate with insurance companies? What do you think about that?

Naren: This is a great question Gary. I think there used to be a time maybe in the past where you could successfully negotiate with insurance companies. So, I think this is one of those questions I think it’s like some people think it’s still possible and still ask if it’s possible so yeah!

Gary: Is this like an urban myth. I heard that my dentist might say hey a friend of one of my friends heard that you could negotiate with insurance companies. Well let’s demystify this Naren.

Naren: Yeah

Gary: And actually, you’re spot on. There was a time when you could negotiate with insurance companies. In fact, we were successful in my own Life Smiles dental practice. In 07, which is now 13 years in the past, we were successful but if you think about it for just a minute, negotiating is all about in the world of business, negotiating is something that is an everyday occurrence in the world of business. It’s not necessarily in the professions like typically patients don’t negotiate with their doctors about fees but in the world of business negotiating is a core strength their key is a fundamental thing that happens all the time in business.

Naren: Yeah

Gary: But think about it for just a minute. Does a dental insurance company need more dentists to be in their PPO plan because if they did then the strength might shift to dentists? The dentist might have more negotiating strength. Do most PPO plans need more dentists because keep in mind Naren, who needs who in this in this dependent relationship, who needs who? Does the dentist need the insurance company or does the insurance company need the dentist at a core level who needs who?

Naren: At a core level, I think the insurance companies need the dentist however

Gary: Absolutely because if they don’t have dentists, they have no plan to sell.

Naren: Exactly

Gary: But what’s happened?

Naren: They flip the whole thing. It’s like imagine eBay or uber right! The driver of the uber doesn’t set the prices. Driver does it of the uber, doesn’t dictate. Same thing with amazon right! Amazon has all the power and the reason is there are a hundred thousand dentists who all independent and they don’t they’re not one they’re like hundred thousand tiny people, as opposed to this one insurance company which is massive right! So, what has happened is over time I think two things again I’m just giving you my take on it Gary. I’m not an expert.

Gary: Yeah

Naren: Two things have happened. One is, over time dentists have started believing that they need the insurance company because they see that’s the only way to get patients, at least many do so they just sign up. So, I think over time that has happened. Second and then you talk about a lot of reasons why that happened. Even the practice management systems don’t report to the dentist how much money they are writing off in insurance adjustment, so they are clueless. So, they think oh, what I make is what insurance pays me, not what I should be making. So that’s a whole set of discussion. Second is, I think insurance companies they’re billion-dollar companies. They have massive budgets massive teams massive like they probably have data scientists and all kinds of people and they’re smart people. They’re not idiots, I mean the CEO makes about 20 30 million dollars. So, I’m pretty sure

Gary: Yeah

Naren: so, I’m sure, if he was an idiot, I’m nobody’s going to pay him 20 30 million dollars in a year. So, they have accumulated power over the last 30 40 years and I know you shared the history of insurance. It used to be people in the dental field whose kind of started it but

Gary: it’s a David and Goliath story because

Naren: Yeah

Gary: Goliath now is the insurance company

Naren: Yeah

Gary: And the underdog the David are the dentists and if we stick with that uber example

Naren: Yeah

Gary: You’re exactly right. Who has the power, if we talk about uber the company and the drivers of uber? Uber the company has all the power. However, if it was to change and if uber was not able to find drivers those scales would shift then I mean the scales of balance would shift, agreed?

Naren: Yes agreed

Gary: And then the drivers, if uber had a serious shortage, right! Just couldn’t get people to drive for uber

Naren: Yeah

Gary: the drivers would have more negotiating strength and that’s exactly what’s going on in dentistry. The truth is PPO plans do not need any more dentists given the fact that over 97 of all dentists in the in the united states are PPO practices

Naren: Yeah and the other thing

Gary: You need anymore

Naren: And the other thing that you said that maybe emboldened them is the fact that every time they increase fees like they did in Washington and then every other state like you said in Washington like four people dropped

Gary: When they decreased when they decrease fees.

Naren: I’m sorry, yeah when they decrease

Gary: yeah no but the dentists have nowhere to go because they’re now dependent on the insurance. Now the one, the one exception to this Naren. actually there’s two, there’s two exceptions to where the power lies and that one would be in the area of specialists, dental specialists. In some cases, the PPO plans would like to see more specialists in their network and so they will negotiate with specialists in some cases. Now in some cases they’re like in the big cities they’re fine. They aren’t going to negotiate New York, Chicago, LA, Seattle, Atlanta for specialists because they’ve got enough of them, but when they start to get out into smaller towns and in rural and remote areas, they might need more oral surgeons, more endodontists, more orthodontists and then the specialists may have some all be it minor negotiating strength. The other situation is the DSO’s. The big DSO’s. The biggest one is Heartland. Heartland doesn’t quite have a thousand locations yet but they’re right on the doorstep of a thousand locations. Do you think heartland has more negotiating strength with the insurance plans with a thousand locations representing? They absolutely do, because

Naren: Absolutely

Gary: PPO may need in some of the smaller towns some of the smaller locations and as a result they may provide a better fee schedule to the heartlands, to the aspen’s, to the pacific dental of the world because they need them. That may absolutely be true but when it comes to the solo doctor, the solo location, the single look or even two or three locations dentists don’t have any strength negotiating because basically if you were to say well imagine me to go as the owner of a practice saying to etna, Edna. I think you I’m a very good dentist. I take great care of my patients. I think you need me they would be laughed off the phone of the insurance companies. No, no, no, no, we got a hundred more just like you signed up all I need is all I need is doctors with the DDS or a DMD after the name people with a DDS or DMDA after the name and as long as I got a bunch of them, I don’t need you. So, here’s the answer to the question. Is it possible negotiate your fee schedule with dental insurance companies? You nailed it when you said it earlier, that ship sailed, that ship sailed. We were successful when we were negotiating with insurance companies. Part of it is you had to get to the right person inside the insurance company and that was a like a maze that you had to wander through to get through the right person to be able to approve a negotiated fee schedule and then you had to have the right circumstances where they maybe could benefit by having another provider in your area but we were successful. However, the negotiation while it was better than the standard fee, it still wasn’t good enough. It still was not good enough. In fact, Naren, there even emerged in 07 08 09 2010. A subset inside dentistry where individuals or companies emerged that would negotiate on your behalf with the insurance companies. Now you know some of them

Naren: Yeah

Gary: Where all of a sudden there was a new niche of hay. The dentist doesn’t know how to do negotiations so use this company and they have largely gone away Naren because what’s happened in the more recent times, we talked about what was happening in the 27 2007 2008 and where we were successful and others were but part of it the word got out because many dentists didn’t know you could negotiate. When the word started to get out that no you can negotiate then many more practices tried to negotiate and eventually the dental insurance companies set it down and shut it down and I have some recent cases coaching wise where clients in the relatively recent past, I’m not talking about 2020 necessarily but 2016 2017 2018 have worked with companies to try to negotiate fees and what I’ve seen since then has been failure. They have not succeeded, have not been able to get a negotiated fee schedule. So essentially the short version of the answer is doctor while it seems like a good idea to try to negotiate with the insurance company essentially that ship sailed. It’s no longer a viable strategy unless you’re a specialist and even then, not guaranteed or a big enough DSO to actually have some negotiation clout. So sadly the answer is no, it’s really not possible today which if some of you were thinking well if I could just get, I know I’m not going to get my UCR fees because but if I could just get a little bit better that’d be okay and I’m going to tell you no that’s not going to happen. I wish I could deliver a different answer to you but no, that’s that that ship sale

Naren: And the other point I think  I may want to just mention is, you said you don’t want to be pennywise and pound foolish, right! I mean when you give up 42 percent and you have done examples after examples. We’ll put a link to it, the PPO write-off calculator. I mean a typical practice making 100 million, sorry a million dollars in collections let’s say it’s insurance dependent could be writing off half a million dollars i mean

Gary: That’s what we’re seeing. We’re seeing just using those round numbers

Naren: Yeah

Gary: Likely if a practice collected a million dollars and they’re PPO dependent they have to produce 1.5 plus to collect that million dollars based on the value of those write-offs.

Naren: So in that kind of a context who cares whether you can save a point or half a point or whatever the tiny bit and like you said they won’t even do it but let’s assume you do get a one point or two point I mean you’re losing a half a million for the next 10 15 20 years, every single year, so well here’s how it might look because again, I can speak to it from experience that you know when we had a 38 average adjustment today. That’s now 42 to 44, and let’s say the insurance company might for whatever reason be willing to negotiate with you and you could get that right off down to 30 percent. Have we solved our problem?

Naren: No

Gary: Not at all because when you do those numbers maybe instead of an if it’s a million dollar practice instead of experiencing 500 000 in write off, maybe it’s 3 75 and so you’re still spending over 30 000 a month on marketing if you accept my definition of think of those write-offs as a marketing expense because you’re paying the insurance company to provide new patients and now let’s say you’re paying 375 a year in marketing because of the negotiated fee schedule, it’s better but it’s still horrible

Naren: Let’s kind of let me ask this. You talk to hundreds of dentists your clients; you speak at conferences you know tons and tons of people. Have you heard of anyone who has a general dentist a small general dentist, not someone who owns that you know like heartland that’s a different case but the small general dental practice? Have you heard of anyone who has been successful at negotiating with the insurance company?

Gary: Not in the recent past,

Naren: Okay

Gary: I now you’re putting me on the spot, I would like to verify this through data but I’m going to take an educated guess here

Naren: Yeah

Gary: I don’t think I’ve seen an example of that any more recent than 2015. Now again

Naren: Wow

Gary:  I cannot recall a situation either with a client or having met a dentist at a workshop or a lecture that said, oh hey Gary we did this. So let me let me show you what we got, since 2015. So no it’s largely an urban myth that you can negotiate. Now it was true at one time

Naren: Yeah

Gary: But unfortunately, that ship sailed but I cannot remember encountering a situation more recently than 2015. So really doctors I guess as we come to the kind of bottom line on this, if you’re counting on the hope of being able to renegotiate fees as much as I’d like to give you a different answer, the answer is no. That isn’t that isn’t there. So really what it leads to is to solve the problem of overhead that’s out of control, you need to successfully resign from the PPO plans and the other thing I’d be maybe there’s a good way to kind of put a ribbon on this particular episode. Whatever we’re feeling today about it, the energy that we get when we see that, xyz ceo is making 28 million dollars a year and the discount rate’s 42, whatever it is right now is only going to get worse

Naren: Right

Gary: Now that again that’s not a message I deliver with any happiness to you. I’d love to tell you i had a more hopeful future regarding PPO but it’s only going to get worse. So that 42 is going to creep up. it’s going to be 43 44 45 48. The abuses by the PPO plans are only good executive compensation is going to go from 28 million to because 28 million is not enough to live on there. So that’s only going to go up and the insidious part and this just makes my blood pressure rise. Dental many dental insurance companies were started by dentists for dentists.

Naren: Yeah

Gary: Delta has a history of being started in 1968 by dentists for dentists with really good intentions,

Naren: Right

Gary: Really good intentions, and what happened over time is that entire, those intentions just got flushed down the toilet for one word and that one word is greed, is greed.

Naren: Right

Gary: And they are the goliath and so you can’t work with goliath the best thing to do is just take it on, like the joke is I don’t know I don’t know Naren if as a kid you were competitive out on the playground, I was. I’m the oldest of three boys and we’re always competing and we would always you know compete in our neighbourhood with the teams and sports and if i own the football, if it was my football and it and it wasn’t going well you could always take, well I’m going to take my football and go play somewhere else. Now I for the record I rarely did that. Well maybe talk to my brothers, they might give you a different story, but yeah you take your ball and go play somewhere else. So, if you think you can work with the insurer, if you think they’re going to treat you well if they if you think they’re going to balance this this scale out, you’re delusional.

Naren: Right go take your ball and play somewhere else. Take your ball and play I’m using the language; I’m using the language of my youth on the street with sports. Go take your ball and play somewhere play with patients that appreciate you. Play with patients that don’t have insurance, so they don’t they’re not even in that whole discussion and your life just got instantly better. So even though I have a unfortunately the answer is no you can’t negotiate with insurance or at least my experience is bad you can’t now, I still have a promising alternative and then just take your ball and go play somewhere else and that’s what I hope all of you are on the path of doing that

Naren: Exactly just um I want to take a moment Gary. I know you’re always giving, giving, giving. You recently celebrated your hundredth episode and this one is episode number 105. Can you talk a little bit about that hundredth episode because it kind of epitomizes what this podcast is about

Gary: Yeah you know if you’re new to the lesson insurance depends podcast, I want to encourage you to go back and listen episode 100. Of course, it has gone viral. It’s the story of a client, Doctor Tracy Hughes from Colorado and she tells her story and over time we had gotten rid of every plan in her practice except for the goliath which was what what’s the name of that one

Naren: Delta

Gary: Delta, yeah and she tells the story in episode 100 about how she successfully resigned from Delta in December of 2019 and how her life has changed since and i’ll be a spoiler, spoiler, alert if you don’t want to hear this hit pause but the spoiler is she’s going to tell you a phenomenal story about her experience since she resigned where she said un prodded by me or you she said Gary Naren the only regret that I have is I didn’t do it sooner,

Naren: Right

Gary: So, there’s some encouragement for you

Naren: Absolutely, so I want to take a moment to invite our listeners, so if any of you are interested in going on that journey in reducing insurance dependence and  you realize or you feel like you can’t do it alone, you need that structure you need the guidance you need the support I strongly, strongly, recommend you reach out to Gary and the way you can do that there’s two ways one is you can go to thrivingdentist.com forward slash coaching, you can learn more about the coaching program, it’s called the practice management support system and the virtual personalized coaching program the way it works is you get to work with Gary and the team on implementing the 24 systems 10 elements of course one of those elements is reducing insurance dependence. Also, you get instead of you being the manager of your team and making sure everybody’s doing everything you get the support of Gary and his team to check in with what Gary calls the champions who are responsible for various parts of your business and the success that you want to drive in those different parts. So, you get that plus Gary has book clubs he teaches verbal skills. So definitely check out thrivingdentist.com slash coaching it’s 1500 a month. No upfront fee, no on-boarding fee, that’s a special price especially because of COVID and Gary wanted to help as many people as possible. The second option is, if you want to get more information or you’re not really sure, we’ll put a link where you can book a coaching strategy meeting to just have a one-hour conversation with Gary just to see if this is right for you. Typically, we don’t do this but given the 100th episode and we have hit a major milestone we wanted to extend this special courtesy. So I strongly, strongly, recommend that you check it out. You have the 100 episodes so definitely binge listen learn experiment try to do the best you can but if you also need the additional support Gary is here for you.

Gary: hey thanks Naren. I’d love to work with any of our listeners that were interested in really getting serious about successfully resigning from PPO plans. Hey we look forward to connecting with you on the next less insurance dependence podcast. Thanks so much