PPO Write-Off and Fee Schedule Calculator

Every PPO contract is a trade: the plan sends patients, and you accept a lower fee for the work you do on them. The difference between your fee and the plan's allowed fee is the write-off. This calculator shows how big that write-off is across the procedures you do most, and then runs the question every owner eventually asks: if we left this plan and some patients left with it, would we come out ahead?

How to use the PPO write-off calculator

1. List up to 10 procedures. Start with the ones that drive the most volume or the most dollars for this plan. For most general practices that means exams, cleanings, radiographs, fillings, and crowns.
2. Enter your office fee (your full, usual fee) and the PPO's allowed fee for each one.
3. Enter how many of each procedure you did in the last 12 months for patients on this plan.
4. Read the write-off columns and totals, then adjust the three scenario inputs to model dropping the plan.

What each input means

• Office fee: the fee you charge a patient with no insurance discount, often called your UCR fee.
• PPO allowed fee: the most you can collect for that procedure from the plan and the patient combined, under your contract.
• Annual volume: the count of that procedure for this plan's patients over a year. Only this plan, not your whole practice.
• Patients lost: the share of this plan's work you expect to leave if you go out of network. Nobody knows this number in advance, which is why the calculator also gives you a break-even.
• Collection rate on office fees: patients who stay will be billed your full fee, with their plan paying out-of-network benefits and the patient owing the rest. Some of that balance is never collected.
• Variable costs: costs that go away when the work goes away, such as supplies and lab. Staff and rent usually do not drop just because a few patients leave, so they are not included here.

The formulas in plain words

For each procedure, the write-off is your fee minus the PPO fee, and the annual write-off is that times the annual volume. The effective discount is the total annual write-off divided by what the same work would have produced at your full fees. It is weighted by volume, so a big discount on a procedure you rarely do matters less than a modest one on cleanings.

For the drop scenario, the calculator compares contribution, meaning revenue minus variable costs, in two cases. Staying in network, revenue is the PPO allowed fees times volume. Dropping the plan, revenue is your full fee times the volume you keep, times your collection rate. Variable costs scale with the work you do in both cases. The net change is the difference. The break-even is the patient loss at which the two cases are equal: lose less than that and dropping comes out ahead; lose more and it does not.

Worked example (hypothetical)

The defaults are a made-up example with six procedures. At full office fees this plan's work would be $191,800 a year. At PPO fees it is $116,660, so the annual write-off is $75,140, an effective discount of about 39.2%.

In this example, dropping the plan and losing 30% of its work leaves the office about $19,518 ahead, and the break-even patient loss is about 42.7%. Change the loss to 50% and the answer flips to a loss of about $11,170. That swing is the whole debate in one number, which is why the break-even is more useful than any single guess.

What the numbers leave out

• Family and referral effects. One patient who leaves may take a household with them, and referrals from that group stop.
• Procedures you did not list. Ten rows cover most of the volume but not all of it. The more complete the list, the better the estimate.
• Plan rules. Frequency limits, downgrades, and how out-of-network benefits are paid, including whether the plan pays you or the patient, all affect what you really collect.
• Contract terms. PPO contracts usually require written notice to terminate and may have other conditions. Read yours before you announce anything.
• What replaces the plan. Many offices that leave a network offer an in-house membership plan to keep uninsured and out-of-network patients.

Next steps and related guides

Run the calculator for each of your major plans, not just the one that annoys you most, and compare break-even figures. Our full article on whether to drop a PPO covers the strategy, communication with patients, and the order to leave plans in. For the bigger picture, read insurance and the revenue cycle and the dental practice KPIs worth tracking, and if you are hiring an associate, run their offer through the associate pay calculator, since write-offs change what production-based pay really costs.

Results are estimates only and are not financial, tax, or legal advice. Review PPO contract terms with a dental-specific attorney and talk to your CPA before making network changes.

Estimates only. This calculator is not financial, tax, or legal advice. Confirm numbers with your CPA, lender, or advisor before making decisions.