PPO Contract Basics

Today, over 80 percent of all dental plans sold are Preferred Provider Organization (PPO) type reimbursement plans. This creates more pressure on dentists to participate in PPO plans than ever before. Most practices are succumbing to the pressure or are at least seriously considering participation in one or more PPO plans.

Most dentists make the decision to participate in a PPO based solely on the fee schedule, without considering some of the other obligations that come along with participation. Contract requirements have a direct impact on the doctor and the practice well beyond the fee schedule. It is important to understand the basic obligations involved with a PPO-type plan in order to evaluate those obligations and make an educated decision on whether or not to participate.

This article outlines the basic obligations included in most PPO agreements.

Provider Obligations

When joining a PPO, the dentist is required to sign a PPO contract. Included in that contract are various obligations that the dentist agrees to uphold. One of the most basic of those obligations is maintaining proper licenses, certificates, and authorizations. The dentist must be a qualified practicing dentist with an unrestricted license to practice dentistry in the state or jurisdiction. All required licenses, certifications, or authorizations must be kept up-to-date and in good standing. If the dentist fails to meet these requirements, the PPO must be notified and the dentist will most likely be terminated as a network provider.

Additionally, many contracts require the practice to maintain certain insurance coverage. The required policies may include general liability insurance, malpractice insurance, etc. If any required insurance is cancelled for any reason, the PPO must be informed of the cancellation.

To ensure that participating dentists meet the standards for licensure, certification, and insurance, most PPOs require contracted dentists to participate in a credentialing program. This information is usually updated with each contract renewal. The following is a list of the information typically required in the credentialing process:

• A current, valid dental license.
• A copy of any related specialty certifications, when applicable.
• A practice or work history for the past five years.
• Proof of current and adequate malpractice insurance
• A malpractice history report for at least the past five years.
• A certificate of other required insurance (such as liability) coverage or similar documentation.
• A current, valid DEA registration number.

Furthermore, the plan generally mandates that the practice notify the PPO if either of the following situations occur:

• A change in the practice’s name, address, phone number, or practice type.
• Any malpractice claim filed against the dentist or the practice or any revocation, suspension, or probationary action involving licensure by the state board of dentistry.

The practice should comply with all laws and regulations that it is subject to follow. Governing bodies and legislation may include the Department of Health and Human Services (HHS), the Health Insurance Portability and Accountability Act (HIPAA), the Occupational Safety and Health Administration (OSHA), the state board of dentistry, etc.

Participating dentists must also maintain a professional relationship with each patient and provide an adequate level of care. When providing care, all professional standards must be followed.

This includes any professional standards relating to the practice’s  specialty or a specific treatment modality. Patients must always be treated equally, regardless of race, religion, sex, nationality, pre-existing condition, disability, disease, etc. Furthermore, the practice must ensure that it provides each patient with the opportunity to receive the same level of service and quality of care, regardless of the type of insurance coverage or lack thereof.

The dentist is obligated to provide each patient with the appropriate care. Once a clinical issue is identified, the dentist should diagnose the condition and suggest a treatment plan. It is the patient’s decision to accept or decline the suggested treatment. All treatment options should be explained to the patient, whether they are covered procedures or are considered optional services. The decision to move forward with treatment should be made based on the care needed, not on the reimbursement provided by the insurance plan or PPO.

There are some services that may never be considered for benefits, per the PPO contract. Among those service types are dental services that are cosmetic in nature, services that are deemed to be below the acceptable standard of care, services that are considered to be clinically inappropriate or ineffective, and new services that may be considered experimental by the PPO. A patient may not be billed for services of this type, unless the payer allows for the billing of optional services and the proper agreements from the patient have been obtained in advance.

Claim Submissions

There are a number of guidelines that PPOs set forth for filing dental claims. All dental claims should be submitted on the most current dental claim form (currently the 2012 ADA Dental Claim Form). Claims may be filed on paper or via electronic claims submission. (Note: Some PPOs no longer accept paper claims.)

Each claim should accurately describe the clinical procedures performed using the appropriate current dental terminology (CDT) codes. Always be sure to use the most current code set when filing claims in order to reduce processing time and optimize reimbursement. Also, do not report dental services using multiple CDT codes if there is a single, more comprehensive code that describes the services. Separating a service into its component parts is referred to as unbundling and may be considered a fraudulent act. PPOs base reimbursement on the codes reported. When multiple services are provided on a single tooth or in a single area, payment may be based on the more comprehensive code, not on the various codes that represent the component procedures.

Most PPOs require that claims be filed in a timely manner. This timely filing period is usually six to 12 months after the service is complete. The completion date may be either the date a single service is completed, or the date the last service in a series of related services is completed. For example, the seat date for a crown or bridge is typically considered the completion date by most PPOs. On the other hand, out-of-network providers are allowed to submit a claim on the start date (i.e., the  procedure is “in process”) or on the completion date, as noted in the signature area of the claim form. Be aware of the plan’s limitations and bill accordingly.

Orthodontic services have different timely filing periods. Most plans make periodic payments for orthodontic services over the course of treatment due to the length of treatment, rather than providing reimbursement after the treatment is complete.

Claims submitted after the timely filing period are not considered for reimbursement. Note that the timely filing limitation only requires that a claim be filed, not that the claim be complete and accurate. If necessary, a more complete and/or correct claim may be filed on a later date.

The existence of primary and secondary coverage can create an issue with this timely filing period when the primary claim is not received in a timely manner. In this case, submit an incomplete claim form to the secondary payer, without the primary payer’s explanation of benefits (EOB), prior to the timely filing date. Then, forward the primary EOB to the secondary payer when it is received. This filing method could help avoid a timely filing denial when secondary coverage is involved.

By filing an accurate and timely claim, the likelihood of reimbursement with the first filing increases greatly. Remember, reimbursement policies are based on claims data obtained by payers. When new codes are adopted, existing codes modified, or codes deleted, the payer may be slow to  recognize these changes. Whether or not a procedure is covered, always accurately report it using the correct CDT code. This may improve the likelihood of that procedure being reimbursed in the future.

Note: Most contracts require that claims be submitted for all services provided to covered patients, even if the service is a non-covered service.

Billing and Fees

The “PPO allowance” is the fee established by the terms of the plan. The PPO allowance is also the fee used to determine patient responsibility. So, how are the fees determined? PPOs often use a proprietary formula to determine the fee schedule. This PPO fee schedule may be based on a  percentage of the “usual and customary fee” (UCR) for a particular service provided in a given service area.

The payer will reimburse the practice based on the lesser of the PPO fee schedule or the practice’s fee, as submitted on the claim form. Some payers (including some Delta Dental Plans) require that their participating dentists submit a current fee schedule. Always provide the PPO with updates when fees increase, so that the fee schedule on file reflects your current fees. If the practice does not regularly update the fees on file with the PPO, the practice may be reimbursed using an old fee schedule. The outdated schedule might be lower than the current PPO fee schedule, thereby leaving money on the table with each claim submission.

When submitting a claim for reimbursement, always report the appropriate fee (i.e., the practice’s fee charged for the procedure, including any discounts), not the PPO fee. The full practice fee should be reported regardless of insurance coverage. If a fee is discounted, either as a professional courtesy or as part of a commercial arrangement, that PPO patient may not be billed for more than the discounted fee. Also, PPOs may not be billed a higher rate than cash patients, or vice versa.

Most PPOs recognize that there are some situations where a patient’s dental treatment is more complicated than usual. In these situations, you may request an increase in the allowable fee for the procedure. Furthermore, most plans will allow the patient to elect to receive an optional treatment. However, the treatment plan must be predetermined with the PPO prior to treatment. The PPO processing policy manual will dictate how the optional service is treated. The plan may only reimburse for the least expensive alternative treatment (LEAT), and the patient will be responsible for the difference between the LEAT and the PPO’s allowable fee for the optional service. Typically, the plan may only limit the fee charged to the patient for the optional service if sold in a state that has not passed non-covered benefit legislation or if the plan is a self-funded plan.

Note: For more information on optional services, refer to “The World of Optional Services” featured in the September/October 2014 issue of Insurance Solutions Newsletter.

When billing the patient, the practice may not bill more than the allowable fee for the services provided. In other words, the practice may not bill the patient for the difference between the PPO allowance and the practice’s fee submitted for the procedure. Furthermore, the practice may not bill the patient for additional non-dental related fees, such as charging for copies of patient records. However, patients are always responsible for any required copayments and deductibles, which may not be waived.

Recordkeeping

Proper recordkeeping is vital. Patient records should be accurate and complete, and should include treatment details, financial arrangements, accounting records, etc. These records must be maintained throughout the contract period and for a given amount of time after termination. While PPO contracts require certain time periods for record retention, federal and state laws also dictate how long patient records must be maintained and that time period may be (and frequently is) longer than the PPO requires.

At any time, a PPO may request to review patient records in support of filed claims. Upon request, the practice must provide complete records, including images, in a timely manner. Furthermore, the PPO may wish to review other records to ensure that the practice is complying with the contract. After receiving reasonable notice, records must be made available during regular business hours. These records may include copies of patient insurance cards, records of patient charges and payments, and other important documentation. During an audit, items other than records may be scrutinized, such as sterilization procedures, OSHA compliance, or cleanliness.

Contracted providers are also expected to follow the PPO’s policies and procedures. The procedures may include billing processes, review standards, and quality control programs. PPOs may sometimes require a review of those policies or request that the provider complete quality assurance surveys in order to ensure that compliance is maintained.

In accordance with federal and state law, the practice must maintain the confidentiality of patient records. PPO documents that are not a matter of public record should be kept confidential as well. This may include PPO fee schedules, provider processing policy manuals, quality review programs, reimbursement policies, etc. The PPO may even request that any confidential plan documents or information be returned following contract termination.

Plan Obligations

The PPO is also subject to various requirements under the contract. The most important of those obligations is providing reimbursement for claims. PPOs usually provide payment for claims of covered benefits that are filed within the timely filing period, as set forth in the contract. Adjustments are typically considered for payment when the claim is resubmitted within 12 months following the initial filing. However, claims filed after the end of the timely filing period are typically not paid.

In order to determine when claims should be paid, the payer must know when the claim was received. Most payers maintain records that track the receipt of all claims. Upon request, a practice can review this record, and can rely on this record as accurate documentation of when the claim form was received. Furthermore, the entity that submits electronic claims to the payer will also maintain a record of when the claim was submitted.

Payers are required to provide reimbursement within a certain time period after the claim is received. State law dictates the time period in which reimbursement must be paid for fully insured plans. However, self-funded (ERISA) plans, which are governed by federal law, do not have prompt payment regulations. Oftentimes, self-funded plans are only required to acknowledge receipt of the claim within 90 days.

Timeliness guidelines apply to accurate and complete claims. Claims that are not “clean” may be denied or may require additional information before they can be fully processed and reimbursed. Issues with a claim may arise because the claim form was not properly completed or filed, the patient was not eligible for coverage, the fee assessed did not correlate with the procedure performed, the claim is deemed to be fraudulent, etc.

If a claim lacks the information necessary to process the claim and provide reimbursement, the PPO may request additional information. This request may be made either electronically or in writing and must be made within a reasonable period of time, typically 30 days after the claim is received. There may be limitations on the time allowed to respond to payer requests for more information. Failure to respond within the allotted time period may result in denial of the claim.

When a complete and accurate claim is received, along with all required documentation, the PPO will provide reimbursement based on the contract terms. They may not refuse to pay a claim for covered dental services rendered. However, payment will not be rendered for covered services if the annual plan maximum has been met, the deductible has not been met, the service is not deemed medically necessary, there are frequency limitations, etc. Furthermore, a retroactive denial and reimbursement request may be made if errors in payment or claims submission are discovered.

PPOs typically do not retroactively deny a previously paid claim. However, if there is just reason for the denial, a refund may be requested. A claim may be denied retroactively if, for example, the claim was fraudulent or the dental services reported on the claim were previously performed or not  performed at all. The payer will provide advance notice of a retroactive denial.

Predeterminations

Most plans have an established predetermination policy. Under this policy, the practice may submit a predetermination request before performing a procedure. The PPO will determine if the proposed dental procedure is medically necessary, if the procedure will be covered under the terms of the existing plan, and what the allowable fee should be. Filing this predetermination will also help determine the plan’s reimbursement requirements.

Sometimes, a payer may require the practice to submit a predetermination for certain services based on service type (e.g., crown and bridge claims) or fee amount (e.g., claims in excess of $300). If the required predetermination is not obtained, the claim may be denied. Furthermore, the patient may not be billed for the denied balance if the service is provided without the mandated predetermination.

If a predetermination is filed and the PPO confirms that the procedure is medically necessary and is considered a covered benefit, the claim will most likely be paid. However, if proper documentation is not provided with the claim, if the claim is not filed as the predetermination indicated, the patient has already met the annual maximum, or the terms of the contract have changed, the claim may be denied. Remember, the predetermination does not guarantee payment, and most include a disclaimer stating this fact.

General Provisions of the Agreement

Under a PPO contract, there are certain provisions that both the practice and the PPO must accept.

First, the PPO contract is an agreement between the dentist and the PPO. Third parties may not receive a benefit from, or enforce any conditions of the contract. This includes any dentist within the practice that has not contracted with the plan. Furthermore, the contract is not an exclusive agreement. This means that the PPO may enter into the same agreement with other dental practices. Likewise, the practice may enter into contracts with other PPOs. Note that some PPOs are now mandating exclusivity, forbidding the dentist from participating in any other PPOs. This new provision has been challenged in court, but there has been no ruling to date.

PPOs can unilaterally amend the contract at any time, as long as the practice is notified in writing of the change within 30 to 60 days. If the amendment is made in order to comply with applicable laws and regulations, the change may be effective immediately. Also, PPOs maintain a list of participating providers that includes each provider’s name, address, telephone number, and specialty. By entering into the contract, the provider grants the PPO the right to publish this type of information in this list. These lists may be distributed to various individuals and organizations, including patients, participating dentists, and regulatory agencies.

PPO contracts are governed by the laws of the state in which they are sold, or by federal law if the plan is a self-funded (ERISA) plan. All contract provisions must be legal, valid, and enforceable. If a provision is deemed to be illegal, the contract may or may not be terminated, depending on the importance of the provision.

Finally, both the PPO and the practice are responsible for their own damages assessed in a lawsuit or settlement of any kind. This includes errors or omissions made by an employee or subcontractor in reference to patient care, advice, or treatment; any breach of contract; or violation of any governing laws or regulations.

Contract Termination

If either the practice or the PPO wishes to terminate the contract, the other party must be notified in writing via certified mail of the termination. Even after termination, all contract obligations for procedures or transactions that were performed prior to termination must be fulfilled.

If the contract is being terminated “with cause,” the notice must include an explanation as to why the contract is being terminated and a reasonable period of time (i.e., 30 to 60 days) must be allowed to rectify the situation. If the issue(s) are not resolved within that time period, the contract will be  terminated as set forth in the termination notice. If the contract is being terminated “without cause,” the written notice must be provided within the time period set forth in the PPO contract.

When your PPO contract is terminated, you should notify all of your patients in writing. Notification must be provided within a certain time period as established by the contract. Failure to notify patients that you are no longer a participating dentist could lead to sanctions. If the dentist terminates the  contract, then the PPO will typically notify patients that they may seek care at other locations that honor in-network fees. The practice should be proactive in retaining these patients by discussing the upcoming termination at appointments or in a letter.

Conclusion

After signing a PPO contract, the dentist is obligated to follow the terms established within that contract. While most practices focus on the PPO fee schedule, it is essential that the dentist be aware of all of the contractual obligations established by the plan. Without a good understanding of the contract obligations, confusion and disappointment may follow. Gaining a clear understanding of the contract terms will allow the dentist to make a more informed decision about whether or not to participate in the PPO.