Dental Association members have seen an increased frequency of third-party
audits the last few years. The increased frequency of audits and their
subsequent payment demands have caused concern among our members.
A member recently
phoned the MDA office to relate his experience with an audit and the proposed
recovery by a third party, in this case Delta Dental of Minnesota. The member
related that he had just been notified of the proposed recovery, even though
the audit had occurred nearly two years previously. The resolution proposed by
the third party is a new twist on resolutions previously proposed to our
members. The Minnesota Dental Association Marketplace Committee felt the
details of the proposed resolution should be brought to your attention, as it
has some troubling aspects.
proposed an immediate payment by the dentist to the managed care company and
then a subsequent arrangement for a reduced reimbursement on claims going
forward for the next several years. Mike Perpich, one of our members who also
consults with other dentists on audits, spoke with this dentist and estimates
the going forward fee reduction is about 40% of this dentist’s billed fees. If
the affected dentist’s overhead is in the usual ballpark of about 70%, the fee
reduction amounts to all of that dentist’s profit plus an additional 10%. For
this specific practice, the proposed discount going forward is approximately
$100,000 per year on the volume this dentist did with the managed care company.
A pretty tidy punishment, I would say.
“sleeper” part of the recovery seems to be the immediate payment, especially
when one compares it to the average initial retainer of $7,500 required by
legal counsel to represent one of us in an audit. One could be lulled into
thinking that for a few thousand dollars more, the whole audit mess will go
away, rather than paying $7,500 and getting into an ongoing battle with a
managed care company. That is unless one realizes what the 40% discount really
costs, and for how long.
In addition, one
must ask, how tightly “locked in” is the practice to the ongoing discount
scenario? Can the practitioner “get out from under” by resigning his or her
providership, or is the settlement a contract with specific long-term
can this scenario be a new tactic to lower fees for targeted practices, or an
attempt to get rid of those practices altogether? Paranoid thinking, you say.
Perhaps, but remember that profiling takes place by managed care companies.
They have identified those of us they believe are too expensive. Remember the “71” providers of a few years ago?
As in any
business decision, we on the Marketplace Committee urge you to study carefully
any proposed resolution, and perhaps get some professional help from legal
counsel and/or consultants who work with dentists being audited. Audits are
scary and gut wrenching, but we can’t let fear stampede us into making poor
business decisions. Your future depends on it. I know. I’ve been through an
If we may be of
assistance in providing you with some information about audits or helping you
helping you find legal counsel or audit
experts, please phone us at the MDA office. Loren Hanson is the staff member to
ask for. Of course, you can phone me or e-mail me at any time with questions. I
can be reached at email@example.com or at (218) 749-1776.
We are here to help you.