How to Profit Immediately from the UCR Lawsuits By Udell Webb, DDS

At a major meeting last weekend, a seminar participant reported a 27.5% increase in revenues over the last 12 months due primarily to the utilization of the tool elucidated by the recent lawsuits concerning UCR. Use of the Health Insurance Association of America’s generated tables had allowed her office to increase profits in an already substantial practice.

In an ADA News article appearing on March 18, 2002, the ADA disclosed a second lawsuit targeting UCR (usual, customary and reasonable fees). The lawsuit alleges “tortuous interference” with the doctor-patient relationship and “trade libel.” Let me explain.

First, the term libel as defined by Merriam-Webster: 2. a. A written or oral defamatory statement or representation that conveys an unjustly unfavorable impression. b. A statement or representation published without just cause and tending to expose another to public contempt (www.m-w.com).

How many times have you bristled at the implication from the insurance companies that your fees were too high? Well, the lawsuits seek to establish in court that, in fact, your fees were not too high. The constant implication or outright statement that your fees are too high has caused you to reduce inappropriately your fees and subsequently maintain them at a nearly profitless level.

Nearly all of the major insurance companies and health service corporations use the HIAA database to establish the UCR levels for their policies. Note that I used the words UCR levels in the plural. HIAA collects the data from millions of submitted dental claims and analyzes that data. The data is divided into percentile rankings and into “geozips.” A geozip is roughly defined (by me) as: the geographic area and dentists contained therein described by the first three digits of the zip code, unless there are not enough doctors in that area to allow for a statistically valid sample, at which point the area is extended. The data is accurate, at least as accurate as allowed by the parameters. The libel is introduced when the insurance companies introduce the term “usual, customary and reasonable” to describe several different percentile levels within the same area or geozip.

Here is a hypothetical example. As a salesperson for XYZ insurance company, I try to sell a policy to a business that has relatively weak revenues, but wants to provide some dental coverage for their employees. I can sell them a reduced premium cost policy, only if that policy will pay less. (Assuming that the insurance company wants to be profitable) Therefore, I sell a policy that reimburses at the 50th percentile. Fifty percent of the dentists in that area are charging that amount or less than that dollar amount. Therefore, they pay less and get less. The libel is introduced when the Explanation of Benefits (EOB) states that this 50th percentile represents the “usual, customary and reasonable” fee for the area. Percentile does not represent nor seek to represent the usual, customary or reasonable.

The problem is exacerbated when the same salesperson sells a more expensive policy to a different company. Let’s say, this time the 80th percentile is sold. Eighty percent of the dentists in that area are charging that amount or less than that dollar amount. The Explanation of Benefits (EOB) states this 80th percentile represents the “usual, customary and reasonable” fee for the area. The same company, the same area, but now there are two different “usual, customary and reasonable” allowances.

I must now remind you of Dr. L.D. Pankey’s definition of a fair fee, “A fair fee is that fee which the patient is willing to pay without losing her gratitude and the doctor is willing to receive without losing his gratitude.” Would you agree that no two molar endo therapies are created equal? Why is the fee not variable too? The care, skill and judgment required to perform our services is variable. It is very moral, legal and ethical to charge variable fees based upon variable situations. You are not committing fraud if you charge different fees for different versions of the same ADA treatment code.

Conclusion
You have lowered or not raised your fees because one EOB said you exceed the UCR. That EOB, and many of the others like it, were for policies sold reflecting a very low percentile of doctors’ fees in your area! You are losing money needlessly, out of fear. You may have maintained your fees below the 50th percentile, when many indemnity policies reimburse at the 70th or 80th percentile. Hence, the lawsuit was necessary. Do you want your 27.5% increase in revenues and profits in the next 12 months? Get your copy of the HIAA database, recognize that many, if not most, decent policies reimburse at the 80th percentile, calculate your cost of production, decide on a reasonable and fair profit level and adjust your fees upward. Remember, the table is based upon fees already being charged in your area!

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Udell (Del) Webb, DDS is a nationally recognized expert in the area of dental insurance management. He is not an attorney, an insurance company employee or licensed by any group or agency to answer insurance-related questions. His answers are based on 25 years of painstaking research into the dental insurance issues that dentists face. If you seek legal advice, contact your favorite legal expert.

Dr. Webb is a 1976 graduate of Baylor College of Dentistry, Dallas, TX. Del is married and has seven children. Contact Dr. Webb at: (877) 628-3366.

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