A large share of any practice's community has no dental benefits, and many of those people put off care because they do not know what a visit will cost. An in-house membership plan (also called an in-office dental plan or membership savings plan) gives them a simple deal: a fixed monthly or annual fee paid directly to the practice, covering routine preventive care, with a discount on other treatment.
Done well, a plan brings in uninsured patients, keeps them on recall, and produces steadier revenue than a low-paying PPO. Done casually, it can run into state insurance rules, conflict with your PPO contracts, or lose money because the pricing was guessed. This post covers how plans work, the legal landscape, plan design, and a step-by-step pricing method with a hypothetical example.
Key takeaways
- A membership plan is a direct agreement between the practice and the patient: a set fee for defined preventive services plus a discount on other care. No insurance claims are filed for plan services.
- State rules vary. Some states have laws that specifically allow direct care agreements with dentists; others may treat certain arrangements as insurance or discount plans that require registration. Confirm with a healthcare attorney in your state before launching.
- Check your PPO contracts. Some contain terms (such as most favored nation clauses) that can interact badly with discounted fees you offer others.
- Price from your own fee schedule: total the retail value of included services, adjust for how much members actually use, and compare the result to what your PPOs pay for the same care.
- A clear written agreement (not insurance, what is and is not included, cancellation and refunds) prevents most disputes.
How an in-house membership plan works
The basic structure is the same across most plans:
- The patient pays the practice directly, monthly or annually, usually by card on file.
- Included services typically cover the preventive visits a healthy adult needs in a year: exams, cleanings, and routine x-rays, sometimes with an emergency exam.
- A discount applies to other treatment, commonly a percentage off the practice's regular fees.
- No claims are filed. The plan is a contract between the practice and the patient, not insurance, and there is no third-party payer.
- Terms are written down: what is included, frequency limits, payment terms, cancellation, and refunds.
The ADA's guidance on in-office plans notes that patients with a benefit plan are much more likely to seek dental care and accept treatment. A membership plan gives uninsured patients a version of that structure, without an insurer in the middle. (See the ADA's in-office dental plans resource.)
Who a plan is for, and who it is not for
| Good fit | Poor fit or needs caution |
|---|---|
| Uninsured adults and families | Patients with active dental insurance (they generally should use their benefits, and offering the plan to them can raise contract issues) |
| Patients whose PPO the practice has left | Patients enrolled in government programs such as Medicaid, where program rules apply; ask your attorney |
| Self-employed people, early retirees, and small business employees without benefits | Patients who need extensive treatment immediately and expect the plan to function like insurance |
| Periodontal maintenance patients without coverage |
If your practice is considering leaving a PPO, a plan can soften the transition for patients who lose in-network status. Our guide to running the numbers on dropping a PPO covers that decision.
The legal landscape: state rules vary
This is the part to take seriously. Whether a membership plan is permitted as designed, and whether it triggers insurance or discount plan regulation, depends on your state and on how the plan is structured and operated.
States with direct care agreement laws that include dentistry
Many states have passed direct primary care agreement laws, which generally declare that a direct agreement between a provider and a patient is not insurance, provided certain conditions are met. The ADA's 2022 summary of these laws found that 20 states' laws included dental services, two of them dental-specific (Illinois and Louisiana), while about a dozen other states had direct care laws that did not include dentistry, including Texas and Colorado. The same summary noted that in Washington, although the statute's language included dental, the state's insurance regulator had ruled dentists ineligible. These laws change, so treat that list as a starting point, not a current map.
One example in detail: Louisiana. Louisiana Revised Statutes 37:798 addresses direct primary care agreements with a dental practice. Among its provisions, as summarized from the statute: the agreement must be in writing and signed; it must describe the services covered, the periodic fee, any additional fees, and duration; it must state conspicuously that it is not insurance; the practice may not bill insurers for services covered under the agreement; either party may terminate on 30 days' notice; no more than 12 months of fees may be paid in advance; and unearned fees must be returned on termination. It also declares that such an agreement is not dental insurance subject to the state insurance code. Other states' laws differ in their details.
When a third party runs the plan
Many practices use a vendor platform to administer membership billing and enrollment. Depending on the arrangement and the state, some structures may be treated as discount medical or dental plans. The National Association of Insurance Commissioners published a Discount Medical Plan Organization Model Act that many states have used as a basis for regulating discount plan organizations, including registration or licensing. Ask any vendor exactly how they handle state compliance, and have your attorney review their answer.
Your PPO contracts
The ADA flags "most favored nation" clauses, which in some contracts can require a practice to give the payer the benefit of the lowest fees it offers others. Read every participating provider agreement for terms about discounts, fees charged to other patients, and whether you may offer a plan to that carrier's members.
Before you launch: have a healthcare attorney licensed in your state review the plan design, the patient agreement, your marketing materials, and your PPO contracts. State insurance law, direct care statutes, discount plan regulation, government program rules, and contract terms can all apply, and they differ by state. Nothing in this article is legal advice.
Designing the plan
Most practices offer two to four tiers. More than that confuses patients and staff.
| Tier | Typical inclusions | Design notes |
|---|---|---|
| Adult preventive | Two periodic exams, two cleanings, routine bitewings, often one emergency or limited exam | The core plan; most members will be here |
| Child | Two exams, two cleanings, fluoride, routine x-rays | Often priced lower; check your fees for pediatric codes |
| Periodontal maintenance | Periodontal maintenance visits at the frequency the dentist prescribes, plus exams and x-rays | Priced higher because visits are more frequent and longer |
| Family or add-on | Discount for additional family members | Keep the math simple for the front desk |
Terms to decide up front
- Discount on other treatment: a single percentage off your office fees is easiest to administer. Decide whether it applies to lab-heavy procedures, implants, and orthodontics, and whether specialist care is excluded.
- Payment terms: monthly with a minimum commitment, or annual up front with a lower effective price. Decide what happens when a card fails.
- Cancellation and refunds: how much notice, and how unearned fees are handled. Some state laws specify this.
- Waiting periods and new members needing immediate treatment: decide how enrollment works for patients who arrive with urgent needs.
- Missed appointments: whether a missed visit counts as used.
What the written agreement should say
The ADA's resource recommends that plan agreements address, among other things: that the plan is not insurance; that no insurance claims will be filed; refund and termination terms; exactly what services are and are not included; and how payment for additional services works. Your attorney will add your state's requirements.
Pricing the plan: a step-by-step method
- List the included services and your current office fees for each.
- Add up the retail value of a year of included services.
- Estimate utilization. Not every member uses every included visit. Your recall data can tell you how many preventive visits an average uninsured patient actually completes in a year.
- Set a price below retail value that is still well above what your PPOs pay for the same services. The discount off retail is the patient's reason to join.
- Account for costs of running the plan: card processing, any vendor fees, and staff time.
- Check the discount on other treatment against your variable costs (lab and supplies), especially for lab-heavy procedures.
- Look at the local market. Compare what nearby practices charge for their plans, and adjust if yours is far out of line.
Worked example: pricing an adult plan (hypothetical)
Hypothetical example. All fees, PPO rates, and costs below are invented for illustration. Codes are from the ADA's CDT code set.
| Included service | Code | Office fee | Per year | Retail value |
|---|---|---|---|---|
| Periodic exam | D0120 | $65 | 2 | $130 |
| Adult prophylaxis | D1110 | $120 | 2 | $240 |
| Bitewings, four images | D0274 | $80 | 1 | $80 |
| Limited (emergency) exam | D0140 | $95 | 1 | $95 |
| Total retail value | $545 |
The practice sets the adult plan at $35 a month ($420 a year) or $399 paid annually. A member saves at least $125 compared with paying retail for the included services, before counting the discount on other care.
Compare to what a PPO pays
| Same year of preventive care | PPO patient (hypothetical fees) | Plan member (monthly) |
|---|---|---|
| 2 periodic exams | $90 ($45 each) | Included |
| 2 prophylaxis visits | $170 ($85 each) | Included |
| Bitewings | $55 | Included |
| Limited exam (if used) | $60 | Included |
| Practice collects | $375 (if all used) | $420, less about $13 card processing (assumed 3%) = about $407 |
Even if the member uses every included service, the practice collects more than the PPO pays for the same care, receives it monthly without claims, and has no claim processing or verification time. If the average member skips the limited exam and one of the two cleanings some years, the effective rate per service delivered is higher still.
The discount on other treatment
Suppose the plan gives members 15% off office fees for other treatment. For a crown with a $1,300 office fee, the member pays $1,105. If the practice's PPO fee for the same crown is $850, the practice collects $255 more from the member than from the PPO patient. Check that the discount still leaves margin after lab fees on lab-heavy procedures, and consider a smaller discount or exclusions for implants and orthodontics.
Utilization cuts both ways. A plan priced assuming low utilization can lose money if members use everything, and a periodontal tier priced like the adult tier will lose money on every member. Price each tier from its own services, and review actual utilization by tier after the first year.
Running the plan in your software
Your practice management system needs to charge the right fees, apply discounts consistently, and track who is enrolled. In Open Dental, the Discount Plans feature (Lists, then Discount Plans) links a plan to a fee schedule and an adjustment type, so the difference between your office fee and the plan's fee is posted as a discount adjustment. It supports an optional annual maximum on total discount and optional frequency limitations, which must also be enabled in preferences to take effect. The Discount Plans Report lists plan details, and the Daily Adjustments Report shows discount adjustments over a date range. See the Open Dental manual page on discount plans for setup steps, which can vary by version. Our billing and A/R module covers adjustments and payment posting more broadly.
For recurring billing, many practices use their software's card-on-file tools or a membership platform. Whatever you use, reconcile plan payments to enrolled members monthly, and ask your CPA how to account for fees paid in advance (for example, whether annual prepayments should be treated as unearned until the services are delivered).
Marketing the plan
- Tell existing uninsured patients first. A letter or email to patients listed as self-pay, and a script for the front desk when a patient says they have no insurance.
- Put it on your website with plain pricing, what is included, and the key terms.
- Add it to your Google Business Profile services list. Our Google Business Profile guide covers services and descriptions.
- Offer it at the moment of need: when a patient declines treatment because of cost, when a patient loses coverage, and when you leave a PPO.
- Use accurate language. Do not call it insurance, and do not imply it covers things it does not. Have your attorney review marketing copy along with the agreement.
Common mistakes
- Calling the plan "insurance" or "coverage" in marketing or on forms.
- Launching without a signed written agreement for every member.
- Offering the plan to insured patients without checking PPO contract terms.
- Pricing the periodontal tier like the adult tier.
- Unclear cancellation terms that lead to refund disputes.
- Staff applying discounts inconsistently because the software is not set up.
- Never reviewing utilization and profitability after launch.
Membership plan launch checklist
- State law, discount plan rules, and government program issues reviewed with a healthcare attorney
- All PPO contracts checked for discount and most favored nation terms
- Tiers defined, with included services and frequency limits for each
- Pricing built from office fees, utilization estimates, and PPO comparisons
- Discount on other treatment checked against lab and supply costs
- Written member agreement drafted and reviewed (not insurance, no claims, cancellation, refunds)
- Software set up (fee schedule, adjustment type, plan, frequency limits)
- Recurring billing and failed payment process in place
- Accounting treatment of prepaid fees confirmed with your CPA
- Front desk script, website page, and patient letter ready
- Utilization and profitability review scheduled for twelve months after launch
Getting started
Start with one adult tier and one periodontal tier, priced from your own fees and utilization data, with an agreement your attorney has reviewed. Offer it to your existing uninsured patients, measure enrollment, retention, and profitability for a year, and then adjust. Keep confirming state requirements with a healthcare attorney, since the rules governing these plans continue to change.
Related reading: should you drop a PPO, hygiene department profitability, and the insurance and revenue cycle chapter of our operations track. The PPO write-off calculator can help you compare plan pricing to what your PPOs pay.
Educational content only. It is not legal, financial, tax, or clinical advice. Prices and ranges are approximate and vary by region, condition, and year. Verify current rules with your state dental board and qualified professionals. ChairsideSource is not affiliated with any manufacturer, the ADA, or the DAT.