Why Dentists Are Dropping Insurance Networks

Across the country, dentists are quietly dropping out of insurance networks. It is not because they do not want patients. It is not because they lack demand. It is because the math stopped working. For a growing number of dental providers, the economics of participating in PPO networks have deteriorated to the point where staying in-network means accepting fees that do not cover the cost of delivering quality care.

This is not a fringe movement. The American Dental Association's Health Policy Institute has tracked a steady decline in dentist participation in preferred provider organization networks over the past decade. What was once a reliable way to fill chairs and maintain patient volume has become, for many practices, a financial trap that compromises both provider livelihood and patient outcomes.

The Reimbursement Squeeze

At the core of the problem is a simple economic reality: insurance companies negotiate reimbursement rates down, and those rates have not kept pace with the rising cost of running a dental practice. Staff wages have increased. The cost of materials, from composite resins to surgical instruments, has climbed. Commercial rent in most metropolitan areas has risen substantially. Equipment maintenance and technology upgrades are more expensive than ever.

Meanwhile, PPO fee schedules have barely moved. Many procedures are reimbursed at rates that were set years ago, with adjustments that lag well behind inflation. For certain common procedures, dentists report that the in-network reimbursement does not cover the direct cost of materials and chair time, let alone overhead. A crown that costs a practice $600 to fabricate and seat might be reimbursed at $750 under a PPO contract, while the practice's usual and customary rate is $1,200. The provider is essentially subsidizing the insurance company's margin with their own labor.^[1]

"We were seeing more patients than ever and making less money. At some point you have to ask: who is this system actually serving?"

The ADA's Health Policy Institute has documented that PPO reimbursement rates have failed to keep pace with practice cost increases, creating a widening gap between what it costs to deliver care and what insurers are willing to pay. For many dentists, this gap has become unsustainable.^[2]

The Administrative Burden

Reimbursement is only half of the equation. The other half is the sheer volume of administrative work that insurance participation demands. Claims processing. Pre-authorizations. Benefit verification. Appeals for denied claims. Explanation of benefits management. Coordination of benefits between primary and secondary carriers. Each of these tasks requires dedicated staff time, specialized knowledge, and systems that add cost without adding clinical value.

Industry data from the National Association of Dental Plans (NADP) estimates that 25-40% of dental plan spending goes to administrative overhead rather than clinical care.^[3] On the practice side, a dental office can easily spend 30-40% of its front desk staff's time on insurance-related tasks. Many practices employ a full-time insurance coordinator whose sole job is managing the claims lifecycle. That is a $60,000-$80,000 annual salary dedicated not to patient care, but to navigating a system designed to control insurer costs.

For the dentist, every denied claim and every delayed payment represents lost revenue and additional administrative cycles. The appeals process alone can take weeks or months, tying up cash flow and consuming staff bandwidth. The cognitive load on providers is substantial: treatment planning becomes an exercise in insurance navigation rather than clinical decision-making.

How Insurance Changes the Patient Experience

There is a less visible but equally important consequence of in-network participation: it changes how dentists practice. When reimbursement rates are low, the only way to maintain revenue is to increase volume. See more patients in less time. Shorten appointments. Reduce the time spent on patient education and shared decision-making. Refer complex cases elsewhere rather than take the time to manage them in-house.

This is not a criticism of the providers caught in this dynamic. It is a structural incentive problem. The insurance model rewards throughput, not thoroughness. A dentist who spends 45 minutes with a patient discussing treatment options, explaining the connection between oral health and systemic conditions, and building a long-term care plan is penalized financially compared to a dentist who moves through patients every 15 minutes.

Patients feel this. The rushed appointment, the sense that their dentist is watching the clock, the treatment plan that is constrained by what insurance will approve rather than what is clinically optimal. These are not failures of individual providers. They are the predictable outcome of a reimbursement system that undervalues the provider's time and expertise.

What Direct Dental Care Means for Providers

Dentists who leave insurance networks are not abandoning their patients. They are choosing a different economic model, one that allows them to practice the way they were trained. In a direct dental care model, the provider-patient financial relationship is straightforward: the patient pays for care, either out of pocket or through a funded dental wallet, and the provider is compensated at fair market rates for the services delivered.

No claims to file. No pre-authorizations to obtain. No denials to appeal. No write-offs to absorb. The administrative overhead drops dramatically. Staff who were spending their days on insurance paperwork can be redeployed to patient care, scheduling, and practice operations that actually improve the patient experience.

For the provider, the financial benefit is significant. Instead of accepting a PPO rate that may be 40-60% of their usual fee, they receive payment at or near their standard rate at the time of service. Cash flow improves because there is no 30-60 day reimbursement cycle. And the practice can invest in the time, technology, and continuing education that drive better outcomes.

"When you remove the insurance layer, something remarkable happens. You get to be a dentist again. You can recommend what patients actually need, not what their plan will cover."

The 70th Percentile Approach

One of the challenges of leaving insurance networks is fee transparency. Patients need to understand what they will pay, and providers need a framework that is both fair and defensible. This is where Toothsome's approach differs from traditional out-of-network billing.

Toothsome's fee schedule targets approximately the 70th percentile of UCR (Usual, Customary, and Reasonable) fees for a given geographic area. This means fees are higher than what most PPO contracts pay, but lower than the highest rates in the market. It is a balance designed to ensure providers are compensated fairly for their work while keeping costs predictable and transparent for patients and the employers who fund their dental wallets.^[4]

For providers, this means no surprise fee negotiations, no annual rate cuts, and no pressure to discount below cost. For patients, it means transparent pricing and the knowledge that their dental wallet funds are purchasing care at rates that reflect actual market conditions, not insurer-dictated discounts.

As Dr. Ponnusamy has written on Substack, the fundamental issue is not that dental care is too expensive. It is that the intermediary layer between patients and providers absorbs a disproportionate share of every benefit dollar. Removing that layer creates room for better compensation and better care simultaneously.

The Direction of the Industry

The trend of dentists leaving insurance networks is accelerating, not slowing. Younger dentists graduating with significant student debt are particularly sensitive to reimbursement rates that do not support loan repayment alongside practice overhead. Established practices that have built strong patient relationships are discovering that patients will follow them out of network when the value proposition is clear.

For employers evaluating dental benefits, this trend has direct implications. The PPO network your employees rely on is shrinking. The dentists remaining in-network are under increasing financial pressure, which affects appointment availability and the care experience. A benefits model that works with this market shift, rather than against it, will serve employees better in the long run.

Toothsome is built for this moment. By connecting employer benefit dollars directly to dental care through funded wallets, providers get paid fairly, patients get access to any dentist, and employers get transparency into how their benefit investment is actually used.

Ready to explore a better model? If you are a provider interested in how direct dental care works with Toothsome, visit our providers page. If you are an employer exploring alternatives to traditional dental insurance, learn how dental wallets work for your team.