Incentive programs: what works-what doesn’t (Part 1)

Incentives in dentistry are often referred to as “provider” incentives. For many, this nomenclature forms a mental image of a dentist actively delivering services to a patient. Based on this mental construct, incentives are designed to focus on ways to motivate that dentist to change their practice patterns by seeing additional Medicaid members or by delivering more preventive services. The logic is that if a provider is paid to see additional Medicaid members or to do more preventive services, then that is what they will do. It sounds like a simple enough premise, but that’s not the way it works.

Follow the money

The reason referring to incentives as provider incentives is flawed is that, only rarely, will the dentist delivering the services every receive an incentive.themselves. The reason is the Internal Revenue Service. The entity paying the incentive, e.g., a dental benefits administrator (DBA), has a contractual relationship with a business entity. Part of that contract is a tax identification number (TIN) provided by the business entity. It is to this business entity that all payments by the DBA must be paid. There is no other realistic option- payments, including incentives, can only go to the business entity after which, it is at their sole discretion on how to use the incentive payment. It could go to general operating expenses of the business, part could be sent to individual offices to use at their discretion, or it might go to a dentist as an incentive. We just don’t know.

There are times when an incentive payment goes directly to a dentists such as a sole proprietorship or a single member LLC (disregarded entity). These business organization structures are increasigly infrequent. It is more common that dentists are employees of a large practice or increasingly, are employed by a DSO. The only way to provide an incentive directly to a provider would be if the DBA had a contract with each provider and each provider supplied a W9 form. It is unlikely that any business entity would accept that arrangement and the administrative overhead of managing thousands of W9s by a DBA would be prohibitive.

We’ve established that having a mental image of an incentive being paid directly to a dentist is just not the way things work. Furthermore having that image shapes how incentives are conceptualized. There is no dentist sitting chairside, receiving an incentive check directly, and therefore changing their practice pattern. This is a critical concept to accept. If the dentist doesn’t receive a check directly, then any motivational approach targeting the dentist will be ineffective.

Accepting there are no “provider” incentives

Progress will be made only by abandoning the concept of “provider” incentives and focusing on the levers that will be more likely to achieve the objectives sought by “provider” incentives.