I do volunteer work for the California Dental Association Practice Support Center. The center has received at least 2 complaints from dentists who have recently purchased practices. The complaints went something like this:
“I just bought a practice from a retiring dentist. He was signed up as a Delta Dental Premier provider. The broker told me to change as little as possible at the beginning so I sent my application into Delta. The Delta representative just told me that I can’t sign up as a Delta Premier provider unless I also sign up as a Delta PPO provider. I just looked at the Delta PPO fee schedule and it’s much lower than the Delta Premier fee schedule. I don’t think I can make it charging such low fees.”
Welcome to the new world of “contract adhesion”. In simple terms, acceptance into one provider contract is contingent upon participating in another. Delta Dental of California currently requires dentists who wish to contract as a Delta Premier provider, and who have not previously contracted with Delta of CA, to also contract as a Delta PPO provider.
Some background on the categories of Delta plans may help in understanding this policy change. Delta currently sells 3 categories of insurance: Delta Premier, Delta PPO, and Delta Care. The Premier and PPO plans are both “PPO” plans in that they require a contracted doctor to charge an insured patient no more than a fixed-fee schedule. These fees are most often lower than the doctor’s regular (UCR) fees. In my experience, Premier fees are approximately 10% lower than a doctor’s UCR fees. Delta PPO fees are approximately 40% lower than a doctor’s UCR fees. Delta Care is a group of capitation (HMO) plans that most private practice dentists don’t deal with.
According to a Delta representative that I spoke with at CDA Presents in San Francisco, Delta has been selling few if any Premier plans in CA during the past year. Premier plans have dwindled to the point where only 10% of their CA insureds have them. Another 10% have Delta Care and the remaining 80% have Delta PPO.
This large shift in the marketplace has not occurred overnight. The Premier attrition has happened over the last 5 to 10 years and has probably accelerated during the current economic downturn. With the shift away from the more costly Premier plans and toward the PPO plans, Delta has needed to increase their network of Delta PPO providers. Hence – contract adhesion.
Unfortunately, Delta’s contract adhesion policy is more problematic than a lower fee schedule for just the new patients coming into a practice. To date, Premier providers who are not Delta PPO providers have been able to treat PPO patients and “balance bill” those patients up to their Premier fees. As more PPO and less Premier plans have been sold, practices have acquired a greater ratio of PPO to Premier patients. When a doctor hires an associate or sells to another dentist who doesn’t have a Premier contract, all of the existing PPO patients treated by that new doctor are switched to the much lower PPO fee schedule. The senior doctor’s practice may be worth less and the junior doctor’s task of maintaining cash flow will likely be more difficult.
Delta claims that 13,000 CA dentists are already contracted as Delta PPO providers. Since all new graduates who wish to practice in CA will either have to contract with Delta as a PPO provider or not contract with Delta at all, the number of PPO providers will likely increase in the foreseeable future.
To me, all of this means that private practice just got harder. Dentists should know, however, that they’re not trapped. Strategies are available to help most survive and thrive in this new marketplace.
Call or email if you have questions.
Dr. Michael Perry
(707) 888-0749
email Dr. Perry