One of the first few topics we speak with Dental Practices about is UCR and doing a UCR Analysis. That’s typically when the room goes silent. The response is usually, “oh, we haven’t done that in a long time.” This response tells me that a UCR Analysis is a top-priority. There is a decent chance the practice is missing out on a LOT of money. A UCR Analysis can give you an idea of how much room you have to correct office fees. By correcting UCR fees, your office will benefit from maximized insurance reimbursements and the ability to negotiate higher rates, leading to increased revenue. 

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Let’s start by defining what UCR is. UCR stands for Usual, Customary, and Reasonable. In other words, this is the fee schedule dental offices use as their “office fee.” UCR fees are important for a few reasons:

  1. UCR Analysis to Maximize Insurance Reimbursements 

In-Network providers with a dental carrier will get reimbursed for dental services rendered based on the In-Network allowable amount. However many dentists make the mistake of submitting the In-Network allowable fee, instead of submitting the UCR fee. It is always a good practice for a dentist to submit the UCR fee, even if it’s higher than the In-Network fee. If your fear is patient’s paying more, don’t worry, they will not. Patients will only be responsible for their patient portion up to the In-Network fee. However, in the event that the insurance raises their fees, and you have not been made aware of this update, you will end up billing a lower fee to the insurance, yet, the insurance will not reimburse you their maximum allowable amount. They will only reimburse you up to the fee of the claim.

Let me illustrate this for you:

Let’s say the amount billed on the claim is the UCR rate. The procedure is D1110, the UCR rate is $170.00 and the INN allowable rate is $92.00. The insurance estimated coverage is 100%, therefore once the claim gets processed, the insurance will send the provider a payment for $92.00. The EOB will have a write-off of $78.00, because you are contracted as an INN provider. Your patient pays $0. Fantastic, you are maximizing the insurance reimbursement rate, and you are not charging your patient anymore than you should.

Now, what happens if your insurance increases the reimbursement rate for D1110 to $95.00, and your office typically sends the INN fee on the claim instead of the UCR fee. If your office has not been made aware of the fee increase by the insurance, and the fee on the claim continues to be $92.00, the insurance carrier will only reimburse you up to the $92.00 you are asking for. Even if their fee increased by $3.00, because you are in fact asking for only $92.00. 

Code D1110 is one of the procedures that are the most recurrent for general dentists. Let’s say for easy numbers, you do 2000 prophylaxis a year, that is $6000 on only one code. You are missing out by not billing UCR fees. Now, imagine the amount of recurrent procedures your practice does. This could signify a huge increase in revenue simply by billing the UCR rate!

  1. Negotiating Higher Insurance Rates: 

When you send a claim to the insurance company, you are telling them that the fee associated with the procedures on the claim are the fees you feel are the right fees for your office to accept. Carriers keeps track of the amount of codes and the fees you submit for those codes. When it is time to negotiate your fees the insurance company will review their data to assess how much you are discounting patients due to your INN affiliation. If the discount percentage gap is small to non-existent, your chances to negotiate a higher reimbursement rate are slim, to none.

Here’s an example:

If your office typically bills UCR rates to the insurance, and let’s say your average reimbursement allowable amount is 60% of the UCR rates, it is as if you are giving your patients 40% off of your office fees just because you are a participating provider with their insurance plan. Therefore, when you negotiate the reimbursement fees with the carrier, you can work to decrease the discount percentage gap by increasing the reimbursement rates. After the negotiation, you were able to successfully negotiate a higher reimbursement rate, and therefore decrease the discount percentage rate. You were able to achieve this because your office has historically been billing UCR rates, and the carrier was able to determine the discounts you have been giving your patient because you have an In Network affiliation

Now, let’s look at the scenario in which your office has only billed the allowable amount. The carrier in this instance has not been able to determine the discounts you have been giving patients and due to this, they may even deny a negotiation, because they don’t believe their reimbursement rates are fair. Yet, the cost to keep your business open does continue to go up, yet your reimbursement doesn’t. Bill the UCR fees on the claim, to have a higher chance to negotiate higher reimbursement fees.

  1. Enhanced Reporting: 

When it comes to managing your KPIs, one important KPI you want to track is your insurance reimbursement rate across multiple carriers. Doing so, will allow you to understand how profitable, or not a particular carrier is, compared to others. To do this, it is essential to submit your UCR rate on all claims. Once insurance payments and write-offs against the UCR are entered, your PMS can help you identify the total discounts your patients are getting, because you are an In Network provider. This will in turn, allow you to determine the reimbursement percentage, and help you identify if the carrier you are participating In Network with is beneficial for your practice, or if you should drop the contract and become an OON provider.

For offices that are very busy, however, would find a Dental UCR Analysis helpful for your practice, you can schedule a call here.

Key Terms:

UCR – Usual, Customary & Reasonable

KPI – Key Performance Indicators

PMS – Practice Management Software