What’s the Deal with Insurance Reimbursement Rates Lately? Let’s Talk About It!

What’s the Deal with Insurance Reimbursement Rates Lately? Let’s Talk About It!

Seriously, dental insurance companies?!

If you’re a dentist, that statement probably resonates with you now more than ever. Lately, the insurance companies with whom you’ve long been in network are throwing you curveballs. They’re sending you letters notifying you that they're devaluing you even more and dropping their reimbursement rates.

Meanwhile, your labor and supply costs are up, and you’ve got more patients flooding in than you can remember in recent years. Talk about a perfect storm of frustrations!

Today, we’re going to dive into the heart of this problem. Why are insurance reimbursement rates changing all of a sudden? What should you do about it? It’s time for some insight and answers …

The Insurance Provider Perspective

If you’ve received one of the aforementioned not-so-welcome letters, you probably wondered why on earth an insurance company would feel the need to do that now.

Likely, it has to do with a tactic they’ve begun using more and more: network leasing. According to an article by Nicholas Partridge, president of Five Lakes Dental Practice Solutions, “11 of the top 15 dental networks now have 4 or more network leasing partners.”

Network leasing refers to the practice of two or more insurance companies partnering up. Let’s say one insurance company with whom you are in network joins forces with another. You’ll now be in network with both. This expands the size of their network as a provider, which means that more providers like yourself will be in the pocket of that original network and the one that joined on. And what does that mean?

Well, inflation! With more providers than ever before in their network, insurance companies don’t feel the pressure to raise their reimbursement rates.

Yep, it isn’t great news.

How This Impacts You

While it depends on which insurance company (or companies) you’re in network with and can also be influenced by other factors like location, practice size, etc., the general result is that reimbursement rates are dropping.

Many practices are being notified that their fee schedules are about to be dropped by as much as 20%. That adds up to a lot of lost revenue.

Combine that with the fact that you’re going through a hygienist shortage, costs are up because COVID has both created a greater need for sanitation and PPE and resulted in supply chain problems, and patients are still getting back on schedule after being unable to attend appointments during quarantine—life inside your practice has been stressful and chaotic and expensive. The last thing you needed was for an insurance company you work with to say “Hi there, we’re going to demand more of your money, FYI.”

So, what do you do? How do you manage this unprecedented moment in a way that will keep your practice profitable and good for patients?

What You Can Do to improve insurance reimbursement rates ... or escape them altogether

There are essentially two options for dentists who find themselves in this frustrating predicament: negotiate your fees or go out of network.

Despite how in-control the insurance companies seem, you have a right to negotiate your fee schedules. Based on the fees you’re charging patients, the competition in the area, and other factors, you can create leverage that will help you successfully negotiate. We'll tackle that topic in a future post.

On the other hand, maybe you’ve tried negotiating your fees, or maybe you’ve decided you are just done with dealing with insurance companies. If that sounds like you, going out of network might be the right move for your practice. We've created a handy calculator for determining how going out of network might affect your practice. We’ve also compiled a guide on how to do that successfully, with tips on everything from retaining patients to implementing programs that will boost your revenue to compensate for any lost ones. You can download that here.

But regardless of which approach you take, understanding the nuances of the problem will surely help you make the most informed, effective decision on how to handle it for your practice moving forward.

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