Understanding the Role of Full Fees in PPO Negotiations and Practice Profitability
If you’ve ever scratched your head wondering why you’re getting paid far less than what you
bill—or why negotiating better PPO rates feels like a losing battle—you’re not alone.
The gap between UCR (Usual, Customary, and Reasonable) fees and PPO (Preferred
Provider Organization) contracted fees is one of the most misunderstood and under-leveraged
components of dental practice profitability.
This article breaks down how to evaluate, manage, and optimize both UCR and PPO fee
schedules—so you can build stronger negotiation leverage, reduce write-offs, and confidently
take control of your collections.
💡 What Are UCR and PPO Fees?
Let’s start with the basics—because these terms are often used interchangeably (and incorrectly).
UCR Fees (Usual, Customary, Reasonable)
These are your “full” fees—the standard, undiscounted rates that you charge patients who are
not using insurance or are out-of-network.
They’re called “UCR” because they reflect what is:
• Usual: What you typically charge for a procedure
• Customary: What’s charged in your geographic area
• Reasonable: Based on complexity, time, and materials involved
UCR fees serve as the foundation for:
• Fee-for-service patient pricing
• In-house membership plans
• PPO negotiations
• Your perceived value and positioning
Think of UCR as your “sticker price.” Even if most people pay less, it sets the standard.
PPO Fees (Contracted Allowables)
These are the discounted rates you’ve agreed to accept from an insurance network in exchange
for access to their patient base.
PPO contracts dictate:
• How much you’re reimbursed per CDT code
• The allowable fee you can collect from the patient
• Limitations, downgrades, and bundling of services
You don’t set your PPO fees—the insurance company does. But you can negotiate them.
⚖️ Why the Gap Matters
Let’s say your UCR fee for a D2392 (two-surface posterior composite) is $250.
But your PPO contracted fee is $150.
The $100 gap between those two numbers is known as the write-off—and it’s money your
practice never sees.
Here’s where it gets tricky:
Insurance companies use your UCR fees as part of their internal calculations to determine
“reasonable reimbursements.”
So if your UCR fees are too low or outdated, they:
• Lower your ceiling for negotiation
• Reduce reimbursement benchmarks
• Disqualify you from higher fee schedules
In other words: low UCR = low PPO leverage.
🧨 The Risks of Setting UCR Too Low
Too often, practices set UCR fees by copying PPO fees or using outdated benchmarks.
This leads to:
• Lack of negotiation power when trying to improve PPO contracts
• Major write-offs on high-cost services like crowns and implants
• Mismatched perceptions of value from patients
• Poor revenue per hour for time-intensive procedures
“You can’t negotiate up if your full fee is already lower than what the PPO is offering.”
🧗 How to Bridge the Gap Strategically
Ready to close the gap between your full fees and what you actually collect? Here’s a strategic
roadmap to optimize both sides:
✅ 1. Set UCR Fees with Data, Not Emotion
Use ZIP-code-specific percentile benchmarks (e.g., 70th–80th percentile) to anchor your fees
appropriately.
Great sources for UCR benchmarks include:
• FAIR Health
• Dental Economics surveys
• PracticeBooster
• PPO Negotiation Solutions’ UCR Fee Analysis Reports
Align your UCRs with:
• Your costs (materials, chair time, staff, overhead)
• Your clinical expertise (specialty, credentials)
• Your desired profitability per procedure
📌 Pro Tip: Always set UCR fees higher than any PPO allowable, even for preventive codes.
✅ 2. Use UCR as the Anchor in PPO Negotiations
Most PPO negotiations aren’t just about the network’s numbers—they often require you to
submit:
• Your UCR fee schedule
• Recent EOBs
• A rationale for your requested increases
If your UCR fees are lower than what you’re requesting from the PPO, you have no case.
You must be able to show:
• A history of higher billing (UCR)
• A competitive market justification
• Clear impact on patient care or outcomes
📌 Pro Tip: Update your UCR 6–12 months before you intend to renegotiate PPOs.
✅ 3. Regularly Audit the UCR-to-PPO Ratio
For each CDT code, calculate:
PPO Contracted Fee ÷ UCR Fee = % Collected
For example:
If your D2740 crown UCR is $1,300, and your PPO pays $780, you’re collecting 60%.
Flag procedures where:
• The collection percentage is below 60–65%
• Lab/material cost eats up 30%+ of the PPO fee
• Chair time exceeds 60 minutes with low net margin
📌 Pro Tip: Consider dropping PPO participation for loss-leader procedures—or adjusting your
UCR fees accordingly.
✅ 4. Educate Your Team and Patients
Many front office teams are confused by UCR vs PPO distinctions. So are patients.
Ensure your team:
• Knows how to explain “write-offs” and UCRs
• Can present treatment plans with confidence
• Doesn’t automatically offer discounts to match PPO rates
For patients:
Use language like:
“Our full fee is $X, but your insurance allows $Y. That’s why you’ll see a write-off—you’re
getting a discount thanks to your network.”
📌 Pro Tip: Always show full UCR fees on your treatment plans and EOBs to reinforce value.
✅ 5. Rebuild Your Fee Schedule Every 12–18 Months
UCR fees aren’t “set it and forget it.”
Best-in-class practices review them:
• Annually, during budgeting or PPO renegotiation
• When new technologies or procedures are added
• When cost of living or inflation rises
• When onboarding associates or expanding services
Update UCR fees gradually to avoid sticker shock. Adjust 5–10% at a time if needed.
📌 Pro Tip: Run a top 30 code analysis to prioritize high-impact changes first.
💬 Case in Point: The Leverage Boost
Dr. Janahgiri, a growth-focused dentist, had been writing off 40–50% of his UCR fees across
multiple PPOs. With the help of PPO Negotiation Solutions:
• His UCR fees were recalibrated based on ZIP-code percentile data
• Strategic PPO contracts were renegotiated over time
• His monthly production doubled, enabling reinvestment in tech, marketing, and team
expansion
That’s the power of a smart UCR-to-PPO strategy.
🔍 Summary Table: UCR vs PPO Fees
| Feature | UCR Fees | PPO Fees |
|---|---|---|
| Set By | The practice | Insurance company |
| Purpose | Anchor for value | Contracted reimbursement |
| Affects | Negotiation, FFS, perception | What you actually collect |
| Frequency of Update | Annually | Contract term dependent |
| Risk of Being Too Low | Loss of leverage, poor perception | Smaller collections, lower margin |
🧠 Final Thoughts: Don’t Let PPOs Define Your Value
PPO reimbursements may be a fact of life—but they shouldn’t dictate your practice’s financial
ceiling.
When you set smart UCR fees:
• You anchor your value
• You negotiate from a position of strength
• You build margin into every service—even discounted ones
• You stop racing to the bottom
Let PPO Negotiation Solutions help you bridge the gap and reclaim your profitability.
💬 Ready to Review Your UCR vs PPO Strategy?
We’ll help you:
• Analyze your current UCR/PPO spread
• Identify underperforming procedures
• Rebuild your UCRs for leverage
• Support PPO contract renegotiations with the right data
📞 Schedule a Strategic UCR-PPO Gap Analysis
Let’s make sure your fee structure is working for you—not against you.