Navigating Dental Insurance Podcast (SayNoToPPOs.com)
Navigating Dental Insurance Podcast (SayNoToPPOs.com)
This podcast.blog teaches the best practices for cash flow, recurring revenue, Membership plans, PPO Fee negotiation, insurance best practices, marketing, reducing your dependence on dental insurance and building a fee for service practice.
Blog By:
Jordon Comstock
Jordon Comstock

The PPO Staffing Tax

The PPO Staffing Tax

8/13/2026 1:01:00 PM   |   Comments: 0   |   Views: 49

The Hidden Payroll Cost of Participating in Dental Insurance

By Jordon Comstock

There is a strange employee working inside thousands of dental practices across America.

They verify benefits.

They explain deductibles.

They submit claims.

They correct claims.

They resubmit claims.

They chase unpaid claims.

They answer questions about insurance coverage.

They explain EOBs patients don’t understand.

They sit on hold with insurance companies.

They deal with denials.

And when a patient gets frustrated because their insurance didn’t cover what they expected?

This employee gets to deal with that, too.

There’s just one unusual thing about this arrangement:

The insurance company doesn’t pay this employee.

You do.

Actually, in many dental practices, it isn’t one employee. Insurance-related administration consumes time across the front desk, billing department, treatment coordinators, office managers, hygienists, assistants and sometimes even the dentist.

Then, after the practice provides much of the administrative infrastructure required to make the insurance system function, something remarkable happens:

The practice accepts a contractual discount on the dentistry, too.

I’ve written before about what I call the PPO Tax—the contractual adjustments that can quietly remove enormous amounts of production from a dental practice.

But contractual adjustments aren’t the entire cost of PPO participation.

There’s another tax hiding inside your payroll.

I call it:

The PPO Staffing Tax.

And if you’re evaluating the profitability of your insurance contracts without considering the labor required to service them, you may be dramatically underestimating what those contracts actually cost your practice.

The PPO Tax You Can See

Contractual adjustments are relatively easy to understand.

Imagine your usual fee for a procedure is $1,500.

Your contracted PPO fee is $1,050.

The difference is $450.

Your actual economics are more complicated than simply calling that $450 “lost profit”—patient acquisition, capacity, procedure mix and overhead all matter.

But at least the contractual adjustment is visible.

You can run reports.

You can calculate it.

You can annualize it.

The staffing cost is sneakier.

It gets buried inside payroll.

Your P&L doesn’t normally contain a line that says:

Employee time spent dealing with PPO administration: $47,382

Instead, it just says wages.

So the cost disappears into normal operations.

That doesn’t mean it isn’t real.

Your Practice Is Running an Insurance Support Department

Walk into the administrative area of almost any insurance-heavy dental practice and listen.

“Can you verify this patient’s benefits?”

“Did we get the EOB?”

“Why was this claim denied?”

“Can somebody call insurance?”

“They’re saying they never received the attachment.”

“Can you resubmit it?”

“The patient thought insurance covered that.”

“What’s left on their annual maximum?”

“Do they have a waiting period?”

“Is this provider in network?”

“Did insurance send the check?”

“Why did they downgrade the procedure?”

This isn’t occasional work.

In many practices, it’s woven into the daily operating system.

And every minute has a cost.

If an employee spends an hour working on an insurance issue, the practice pays for that hour.

If several employees spend portions of every day managing insurance, the practice is effectively operating an internal insurance administration department.

Who’s funding it?

You are.

Start Before the Patient Even Arrives

The administrative cost can begin before the patient ever sits in the chair.

A patient schedules an appointment.

Now the practice may need to determine:

Is the policy active?

Is the dentist in network?

What is the deductible?

How much has been met?

What’s the annual maximum?

How much remains?

Are there frequency limitations?

Is there a waiting period?

Are certain procedures excluded?

When was the patient’s last cleaning?

Are radiographs eligible?

Does the plan require preauthorization?

Depending on the practice and payer, some of this can be automated or handled electronically.

Other times, someone on your team is logging into portals, checking data, making calls or resolving discrepancies.

That’s labor.

And you haven’t performed a single procedure yet.

Then Comes the Treatment Conversation

Now imagine the patient needs treatment.

Your doctor diagnoses what is clinically appropriate.

But another conversation immediately begins:

“What will my insurance cover?”

Notice how quickly the conversation changes.

The patient isn’t necessarily asking:

“What’s the best treatment for me?”

They’re asking:

“What will this third party pay for?”

Now your treatment coordinator or front-office team becomes an interpreter between the patient’s clinical needs and an insurance contract they didn’t write.

They estimate benefits.

Explain limitations.

Discuss deductibles.

Calculate patient portions.

Explain that an estimate isn’t a guarantee of payment.

And when the insurance company’s eventual determination differs from the estimate?

Guess who the patient calls?

Probably not the insurance company’s CEO.

They call you.

Congratulations: You’re Now Customer Support

This is the part I find fascinating.

The insurance company sells the insurance product.

The patient’s employer may choose the plan.

The carrier establishes many of the rules.

But when the patient doesn’t understand those rules, your dental practice frequently becomes customer support.

“Why didn’t they cover this?”

“Why do I owe $600?”

“I thought I had insurance.”

“Why isn’t this covered twice a year?”

“Why did they pay less than you estimated?”

Your team then spends time explaining a financial product your practice didn’t sell.

And when patients are angry?

Your practice can absorb the frustration.

That’s an incredible business arrangement.

For the insurance company.

Then You Actually Have to Get Paid

After providing the dentistry, the administrative work isn’t finished.

The claim has to be created and submitted accurately.

Documentation may be required.

Attachments may need to be sent.

Narratives may be necessary.

Then you wait.

Sometimes everything works beautifully.

Other times:

Claim denied.

Claim delayed.

Additional documentation requested.

Wrong information.

Missing attachment.

Resubmit.

Follow up.

Appeal.

Check again.

Call again.

Sit on hold.

Correct something.

Send it again.

Meanwhile, you’ve already paid the hygienist, assistant, front-office team, rent, supplies and other costs associated with delivering care.

The insurance receivable is still sitting there.

Your team now has to collect money your practice has already earned.

The Denial Has a Labor Cost

We often think about a denied claim based on the dollar amount at risk.

Suppose $800 hasn’t been paid.

That’s obviously important.

But there is another cost:

What does it cost to recover the $800?

Maybe someone spends 15 minutes researching the issue.

Then 20 minutes calling.

Then another 10 minutes preparing documentation.

Then another follow-up.

Individually, these incidents can look insignificant.

Across thousands of claims, they can become a meaningful operating expense.

That’s why practice owners should begin thinking about insurance administration as a cost-to-serve problem.

Revenue isn’t enough.

You need to know what it costs to produce and collect that revenue.

The $25-an-Hour Employee Doesn’t Cost $25

Here’s another trap.

Suppose you estimate that an administrative team member costs $25 per hour.

Their real employment cost may be higher after considering payroll taxes, benefits, paid time off, recruiting, training, software, management and other employment-related costs.

So when calculating the PPO Staffing Tax, don’t think only about hourly wages.

Think about loaded labor cost.

Now multiply that by the hours your organization spends servicing insurance.

For illustration, imagine an insurance-heavy practice determines that the equivalent of 40 staff hours per week is devoted to insurance-related administration.

If the practice estimates a hypothetical loaded labor cost of $35 per hour:

40 hours × $35 = $1,400 per week

Across 50 working weeks:

$70,000 per year.

That is only an illustration, not an industry benchmark.

Your practice could be dramatically higher or lower.

That’s exactly why you should measure it.

And remember: this is in addition to contractual adjustments.

Now Calculate the Real PPO Tax

I’ve encouraged dentists to calculate their contractual PPO adjustments.

I’d take that exercise one step further.

Create a basic PPO Cost Scorecard.

For each major PPO, look at:

1. Contractual adjustments

How much are you writing off?

2. Administrative labor

How much team time is required to verify, submit, follow up and collect?

3. Collection friction

How long does it take to receive payment?

4. Denials and appeals

How frequently does your team have to perform additional work?

5. Patient-service burden

How much time does your team spend explaining benefits and resolving insurance-related confusion?

6. Clinical capacity

How much valuable chair time is associated with the plan?

7. Net economics

After all of that, how attractive is the relationship actually?

This gives you a much more sophisticated picture than simply asking:

“How many patients does this PPO send us?”

Your Largest PPO Could Still Be Your Most Expensive

This is where volume can fool you.

A PPO may represent hundreds of patients.

That feels valuable.

And it may be.

But volume doesn’t automatically equal profitability.

Imagine two contracts.

One produces substantial patient volume but comes with aggressive fee reductions and significant administrative complexity.

Another provides fewer patients but stronger reimbursement and less collection friction.

Which one is better?

You can’t answer that from patient count alone.

You have to understand the economics.

That’s why I believe dentists should rank their PPOs from best to worst.

Don’t treat every insurance contract equally.

They’re not equal.

What Would Happen If You Redirected That Labor?

There’s another cost that’s harder to put on a spreadsheet:

opportunity cost.

What else could your team be doing?

Instead of chasing a claim, they could be reactivating an overdue patient.

Instead of explaining an EOB, they could be helping a patient schedule diagnosed treatment.

Instead of sitting on hold, they could be asking a happy patient for a referral.

Instead of manually solving another insurance problem, they could be helping an uninsured patient understand your membership plan.

Your team’s time is finite.

Every hour spent servicing one activity is an hour unavailable for something else.

The question isn’t merely:

“How much does insurance administration cost?”

It’s also:

“What growth opportunities are we giving up because our team is doing it?”

There Is Another Model

This is one reason I’ve become such a believer in direct dental membership programs.

Membership doesn’t magically eliminate every administrative task.

But the economic relationship is fundamentally different.

The practice creates the membership program.

The practice defines the included services and member benefits.

The patient joins the practice’s program.

The financial relationship is directly between the patient and the practice.

Instead of asking:

“What will my insurance company allow?”

the conversation becomes:

“What does my membership include?”

That’s much simpler.

And perhaps even more importantly:

The relationship belongs to the practice.

Build Recurring Revenue Instead of More Administrative Complexity

A membership patient can pay monthly or annually according to the practice’s plan structure.

That creates recurring revenue.

Imagine 500 members paying an average of $45 per month.

That’s:

$22,500 per month in gross recurring membership revenue.

Or:

$270,000 per year.

Again, that’s revenue—not profit. The practice still incurs the clinical and administrative costs of delivering the benefits included in the plan.

But the business model has changed.

Instead of relying entirely on third-party reimbursement, the practice has created a direct recurring financial relationship with hundreds of patients.

That can become part of the financial safety net a practice builds before reducing PPO dependence.

Where BoomCloud Fits

This is exactly the problem we built BoomCloud to help solve.

BoomCloud helps dental practices create, manage and automate their own membership programs.

Practices can build custom membership plans, enroll patients, manage members, automate recurring billing and renewals, and track membership growth and recurring revenue.

Instead of replacing insurance administration with a giant membership spreadsheet—and creating another administrative monster—software can automate much of the recurring membership infrastructure.

The bigger goal isn’t simply processing payments.

It’s helping practices build a direct economic relationship with their patients.

That creates options.

And options matter.

Don’t Fire Every PPO Tomorrow

Whenever I write about this subject, somebody inevitably assumes I’m saying:

“Drop every PPO immediately!”

I’m not.

For some practices, PPOs are an important patient-acquisition channel.

For some contracts, the economics may work perfectly well.

For other practices, suddenly terminating a major PPO could create significant disruption.

The smarter strategy is:

Measure first.

Calculate the PPO Tax.

Calculate the PPO Staffing Tax.

Rank your contracts.

Build recurring membership revenue.

Strengthen patient relationships.

Create your financial safety net.

Then evaluate whether every PPO still deserves a seat at the table.

Stop Asking Only What a PPO Pays

The dental industry needs a better question.

Instead of:

“What’s the PPO fee schedule?”

Ask:

“What does this PPO relationship actually cost us?”

Because the reimbursement number tells only part of the story.

The true economics may include:

Contractual adjustments.

Payroll.

Verification.

Claims.

Denials.

Appeals.

Collections.

Patient questions.

Administrative complexity.

Clinical capacity.

And opportunity cost.

Put all of those together and you begin seeing the complete picture.

Your Team Is Too Valuable to Be an Unpaid Insurance Help Desk

Your front-office team is one of the most valuable assets in your practice.

They build relationships.

They create first impressions.

They help patients understand treatment.

They reactivate patients.

They schedule care.

They retain families.

They create an incredible patient experience.

Their highest and best use probably isn’t spending hours untangling someone else’s insurance product.

So measure it.

For the next month, have your team track the approximate amount of time spent on insurance administration.

Verification.

Claims.

Denials.

Appeals.

Follow-up.

Collections.

Patient insurance questions.

Then calculate the labor cost.

The number may surprise you.

Because the PPO Tax isn’t necessarily just sitting inside your adjustments report.

Part of it may be hiding inside your payroll.

And once you understand the real cost of participating in each PPO, you can finally make decisions based on economics rather than habit.

Build your membership plan.

Build recurring revenue.

Build direct relationships with patients.

Then decide which insurance contracts truly deserve your team’s time.

Because your dental practice was created to take care of patients.

It shouldn’t have to moonlight as an unpaid customer-support department for the insurance industry.
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