Lie #6: Umbrella Plans Have Better Fee Schedules
This is our sixth post in the Biggest Lies in Dentistry series. Things the dental industry repeats to itself until they sound true. See the full series here.
Before we get into whether umbrella plans have better fee schedules, we need to be clear on what an umbrella policy actually is. Most dentists know they have one. Fewer know exactly how it works.
That's a little like buying a car without knowing whether it runs on gasoline or diesel. You'll figure it out eventually (and it might not be pretty), but it would have been nice to know before you signed the paperwork. Fortunately, umbrella policies aren't complicated once someone explains them. The problem is that almost nobody ever does.
An umbrella policy is a contract between you and one company that gives multiple insurance companies access to your practice. Instead of negotiating and signing separate agreements with each carrier, you sign one contract with the umbrella company, and they negotiate on behalf of every carrier participating under it.
And let me be clear about something. I don't like PPOs. I never have. I think the long-term answer for most private practices is learning how to get out of network altogether, and I've spent years helping practices do exactly that. But that's a different article. If you've decided, for whatever reason, that you're going to participate anyway, then at least understand what you're signing up for.
How these get sold
The pitch is straightforward. The representative shows you the fee schedule from one of the umbrella's flagship carriers. Aetna is a common example. In a lot of the country, the Aetna fees under an umbrella agreement really are better than contracting with Aetna directly. You compare those fees to the ones you're getting now and think, well, that's less terrible.
And to be fair, it probably is.
The problem? Well, you didn't just sign up for Aetna. You signed up for a collection of smaller regional carriers and leased networks that came along for the ride. Some of them reimburse reasonably. Some don't. Some pay fees that make you wonder if someone left a zero off the reimbursement. Seven hundred dollars for a crown?
And this is where the myth starts.
The question isn't whether an umbrella plan has better fee schedules. Some genuinely do. The real question is whether the whole agreement leaves you better off. Those are two completely different questions, and only one of them gets asked in the sales meeting.
The part nobody explains
Many umbrella agreements let you choose which carriers you participate with. Just because a company sits under that umbrella doesn't automatically mean that you have to accept them. Depending on the agreement, you may be able to decline specific plans, provided you do it correctly, which usually means in writing and within the time frame the contract specifies.
The problem is that almost nobody reads that far. The representative isn't going to spend half an hour walking you through how to opt out of the plans they're trying to sign you up for, and most dentists are too busy looking at the Aetna schedule to ask. So, the agreement gets signed, filed away, and forgotten.
Months later you're holding an EOB from a carrier you've barely heard of, wondering when you agreed to this. That is also how a lot of offices end up verifying against the wrong fee schedule: they contracted with one name and they are being paid on another.
The day you signed the contract. You just didn't know that's what you were signing.
Getting in is easy. Getting out is not.
When you've had enough of the carriers paying seven hundred dollars for a crown, you generally can't just call and cancel that one plan. In many cases you're terminating the entire umbrella agreement.
And if you still want to participate with one of the flagship carriers, you may have to credential with them separately, from the beginning. That takes time, and during that time you're out of network with them.
Whether that matters to you is a business decision. The point is knowing it before you sign rather than discovering it after you've spent years in plans you never wanted.
So what can you actually do?
Some carriers under an umbrella agreement really do have better fee schedules. That part of the presentation may be entirely true. But if the good schedule comes bundled with a set of plans still paying what looks like 1993 money, the benefit can disappear fast.
Read the contract before you sign it. Heck, I would have my attorney look at it as well. Find out exactly which plans are included, which ones you can decline, and how you have to decline them. If the agreement doesn't give you that flexibility, stop and do the math first. One attractive fee schedule isn't much of a bargain if it quietly commits you to five bad ones.
One last thing
Don't resent the patient sitting in your chair whose plan only allows $700 for a crown. They didn't negotiate the contract. They didn't sign the umbrella agreement. They didn't choose your fee schedule.
You did.
Part of The Biggest Lies in Dentistry. Read the full series here.
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