How your dental practice gets paid is of supreme importance. There are numerous elements that surround the entire area of accounts receivables, and it literally “pays” be know how these aspects factor into your overall income strategy. A working knowledge of UCR can actually benefit your dental practice and help you avoid financial losses.
First, let us define what UCR is as it pertains to dentistry. The acronym stands for usual, customary and reasonable. However, to many dentistry practices, it seems rather unreasonable and not at all fair. Basically, the term UCR applies to the fees and reimbursements that insurance companies pay to dentistry offices for services. It has been adopted by dentistry and can be found on EOB (Explanation of Benefits) forms that offices use to request reimbursement from insurance plans. Since the reimbursement amounts can often seem unfair, here are some ways to make UCR work for your practice and avoid taking a financial loss.
UCR is not actually a number; instead, it is a range of numbers based on percentages. Insurance companies will pay out a certain percentage based on the cost of a dental procedure. Even though it is based on percentages, there is also a cap on how much the company will pay for each procedure and insurance will pay out whichever cost is less. Zip code and percentage plays a large factor in determining UCR at insurance companies. Geographical area has some weigh-in on the amount that insurance will pay. Let us look at an example.
In your geographical area, let us assume that the majority of dentists chart $200 for a crown; so, the insurance company would set the fee at $200. Let us say that your office charges $150 for crowns. A patient’s insurance plan pays 50% toward the charge, which is $75, leaving a $75 remaining balance. In another scenario, let us say your office charges more than the average $200; say you charge $300. Insurance would still pay 50%, or $150 and there would be a $150 balance remaining.
How UCR Affects Your Practice
Dentist offices may be forced to lower charges for services in their area to retain clients. However, lowering charges for services too much can result in a financial loss to the business. Knowing UCR levels could mean increased revenue for your business.
An article details a hypothetical scenario about an average dentist office’s profit: “…dental practice grossing $400,000 per year. The average overhead in a $400,000 practice is 70 percent. If our hypothetical office is open 40 hours per week, 50 weeks per year, then the dentist works 2,000 hours per year. The office overhead is $280,000. Total overhead ($280,000) divided by 2,000 hours gives us an hourly overhead of $140. That is the fixed overhead before the doctor is paid a single penny.
Now say a patient were to come in needing a prophylactic cleaning and claimed it to be covered at 100%.” …the office submits the claim form. The fee for the cleaning was $85, the overhead cost was $140, and the doctor`s/hygienist`s salary must be added to that. The office just lost $55, plus the salary of the doctor/hygienist.”
In another explanation of the effects on patients and business, it is stated, “In situations where a single company serves one geographical area, their usual, customary and reasonable fee schedule affects the prices of dental services in the area. Where a dentist charges more than the set usual, customary and reasonable fees, they have no option but to lower their fees in line with the average charges in the area. Consequently, when a dentist realizes that they charge less than what is set in their area of practice, the chances are that they will raise their fees.”
How to Make UCR Work for You
One item on your agenda should be analyzing your fees. By assuming that you will only be reimbursed 70%, for example, you could be losing money. Different plans could be paying 80% or even 90% but could be reimbursing you less money because you are charging less for your services. Routinely monitor your EOBs (explanation of benefits) and find out which plans cover at what percentages.
Pre-certification and pre-authorization are easy steps to take to ensure maximum benefits. Pre-certification verifies that a patient is active with an insurance plan. Pre-authorization involves submitting a request for treatment to insurance for payment. Some insurance companies require this for payment! Verifying benefits can be combined with the pre-authorization process. You want to be sure that the procedure you are requesting to be performed is covered under the patient’s insurance plan.
So how can companies like PPO Negotiation Solutions help your business? PPO Negotiation Solutions has an eight-step process to save you money and increase your revenue. Part of that process is to evaluate your current UCR and PPO fee schedules in comparison with other dental practices in your area. Also work on PPO fee negotiations, provider credentialing, and staff education. Let the experts educate you and set you on the path to success. Call or click today!