Dropping a PPO: What dental practices should know before casting them overboard

Several years ago, when I was in private practice, my partner and I decided to drop our lowest-paying PPO.? We had exceeded our capacity (more on that below) and the stress of meeting scheduling demands was wearing on us, our team, and our patients.? We made our assessment, pulled the trigger, and almost immediately reaped the benefits.

Going out of network is not a new idea, but it’s certainly picked up steam recently.? The ADA’s Economic Outlook survey reported in December 2023 that approximately 40% of dental practices were planning to drop at least one PPO in 2024 (link). By the third quarter of this year, around 26% had taken this step, with another 22% still seriously considering it (link). For the practices that dropped a plan, the PPO represented approximately 22% of their patient base, which is significant.

Why Are Practices Dropping PPOs?

The profit margin squeeze is real.? As Marko Vujicic’s ADA Health Policy Institute continues to show, the costs of running a practice are increasing and revenue is not rising commensurately.? Lackluster revenue is due, in part, to flat or even decreasing payer reimbursements (link). PPOs can restrict reimbursement rates, leaving practices with thinner margins and less room to navigate rising operational costs. Many practices, especially during inflationary periods, are seeking ways to regain control over their pricing and operations without compromising the quality of patient care.

Indicators That It May Be Time to Drop a PPO

If you’re considering dropping a PPO, you’ll gain confidence in the decision if you meet one or both of the following:

• Sustained capacity issues

Your schedule is at capacity if, for at least 6 months, your hygiene schedule is 95% or more filled four weeks out and your dentist schedule is 95% or more filled two weeks out.? There are other levers you can pull to increase capacity (e.g. expanding office hours), but note that these options may also increase your overhead.

• Payer reimbursement issues

If you’re one of the third of dentists who saw reimbursements decrease last year (link), or if you’ve found that a payer has dialed up their claim denials, then ditching a plan can be a sound strategy even if your schedule isn’t fully booked.

Pulling the Trigger

Here’s the process I used to drop a PPO:

1. Assess which plan has the most adverse impact to your bottom line.? Consider true reimbursement rates (not what’s listed in the agreement but what they actually pay you after downgrades and other games) and your administrative costs (how much those back and forth games are costing you in employee time).
2. How many patients in your practice are insured? My partner and I were prepared to lose all 7% of the affected insureds.? According to the ADA data I’ve shared, dentists are dropping three times as many from their practices.
3. Notify the payer. You might consider this as a last round of fee negotiation with the knowledge that you’ll finally make good on your threat to walk away.
4. Notify your affected patients.? The PPO will have a contractual period (60-90 days is typical) in which you must still care for those patients.? My partner and I had a prepared script that was shared with them as they came in for their appointments.? We also sent a formal letter to everyone.? The payer will most likely send your patients a letter as well.
5. Can you transition the patients to self-pay? The letter we sent explained that we would still be honored to treat them but it would be under a different arrangement.? Ultimately we lost almost every patient, but we were glad to have the much needed capacity back in our schedule.