Dental Marketplace Committee

Minnesota 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.

The resolution 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.

The apparent “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 obligations?

More deviously, 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 audit.

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 camjayson@msn.com or at (218) 749-1776.

We are here to help you.