Dental Insurance Credentialing After You Buy a Practice

A buyer who closes on a dental practice tends to assume the claims will keep going out the way they did the week before. They will not, unless the work started months earlier. Credentialing attaches to dentists and to the entities they bill through, not to the building, the equipment or the patient list.

In an asset purchase, the buyer’s new entity starts with no payer contracts, no Medicaid enrollment and no organization NPI of its own. Every day between closing and the buyer’s effective dates is a day of treatment that may not be billable as planned, and the shortcut that suggests itself, billing under the seller’s numbers, carries its own risk.

Credentialing is how a payer agrees to pay a specific dentist at a specific entity

Dental insurance credentialing is the process by which a payer reviews a dentist’s qualifications, contracts with the practice, and adds the dentist and the billing entity to its network from an effective date. It has two layers, and both matter in a sale:

• The dentist. Each dentist can have only one Type 1 NPI. The CMS NPI fact sheet says individuals are eligible for only one NPI, and an incorporated provider can also obtain a Type 2 NPI for the corporation or LLC.
• The billing entity. The practice’s professional corporation or LLC has its own tax ID, its own Type 2 NPI and its own contract with each payer.

An NPI is not credentialing: CMS says having one does not “Enroll a provider in a health plan.” A covered provider must report changes to its NPI information within 30 days (45 C.F.R. s. 162.410(a)(4)).

How do you credential a dental provider? Obtain the NPIs, gather the license and supporting documents, apply to each payer, sign the participation agreement, confirm the effective date in writing, and keep every record current. Florida Medicaid, whose enrollment policy is incorporated in Rule 59G-1.060, F.A.C., shows the structure: a provider enrolls as a sole proprietor, a member of a group, a group, or an entity, and a dentist who forms, joins or leaves a group files a group membership authorization. Most Florida Medicaid recipients are in Statewide Medicaid Managed Care, which has its own Dental Program run through contracted dental plans, and a provider who only participates in a plan’s network can enroll on a “limited” basis.

A practice sale does not carry the seller’s payer contracts to the buyer

Whether to buy the assets or the entity is a trade-off to weigh with your CPA. For credentialing, the difference is this.

Asset purchase. The buyer’s entity is a new provider. It needs its own tax ID, Type 2 NPI and Medicaid enrollment, and a contract with every payer it will bill, unless a seller contract can be assigned to it, which depends on that contract’s own terms. Florida Medicaid’s policy says providers “must not enroll using a TIN belonging to another person or entity,” and that provider ID numbers are non-transferable except for hospitals, intermediate care facilities and skilled nursing facilities.

Entity purchase. The entity stays the provider, and its NPI and contracts stay with it, but its owners change, so read each contract’s change-of-control and notice clauses; for Florida Medicaid, a change of ownership of the enrolled entity lets the agency revoke its provider agreement (s. 409.907(6), Fla. Stat.). Whether it keeps its tax ID depends on its tax classification; the IRS lists the cases by entity type.

If the sale is a change of ownership of the entity enrolled with Medicaid, s. 409.907(6)(b), Fla. Stat., sets the clock: at least 60 days before the anticipated change, the seller must notify the Agency for Health Care Administration and the buyer must submit a Medicaid provider enrollment application. Without that notice, seller and buyer are jointly and severally liable for all overpayments, fines and other money due to the agency. Even with it, the buyer is liable for overpayments the agency identified on or before the effective date of the change.

The dentists move too. A seller who stays on, and every associate who stays, has to be linked to the buyer’s entity with each payer, and with Florida Medicaid through the group membership authorization.

If you are buying a practice and have not yet listed every payer it bills, start that list before you sign the letter of intent. Schedule a confidential consultation

Billing under the seller’s credentials after closing is a risk, not a shortcut

For Medicaid, the rule is explicit. The enrollment policy says providers “must not share their provider ID, nor use another individual’s or entity’s provider ID, to submit claims.” Section 409.913(7)(a), Fla. Stat., requires every Medicaid claim to be for goods or services that “have actually been furnished to the recipient by the provider prior to submitting the claim,” and the agency “shall deny payment or require repayment” for claims that fall short.

For commercial payers, s. 817.234, Fla. Stat., can apply. A person commits insurance fraud if, with intent to injure, defraud or deceive an insurer, the person presents a claim knowing it contains false, incomplete or misleading information material to the claim. “Insurer” includes health maintenance organizations and similar entities regulated by the Office of Insurance Regulation. Graded by the value of the property involved, the offense is a third-degree felony below $20,000, second-degree from $20,000 to under $100,000, and first-degree at $100,000 or more. A claim that names the seller as treating dentist for work the buyer performed is a false statement on a claim under s. 817.234; bill each service under the dentist who performed it. Read the payer agreement too, since its terms on who may bill under it apply in addition to the statute.

Close the gap in the letter of intent and the purchase agreement

Each payer sets its own effective date. For Florida Medicaid, a new enrollment takes effect on the date the agency receives the application; after a change of ownership, on the latest of that date, the date the change was complete, or the date the applicant became eligible (s. 409.907(9)(a), Fla. Stat.). Either way, the buyer generally cannot bill Medicaid for care before the agency has its application; s. 409.907(11) lets the agency, at its discretion, make an entity eligible for payment from the date it first furnishes services. Ask each commercial dental plan whether it will make an effective date retroactive, and get the answer in writing.

Three tools manage the gap: file as early as each payer allows, set the closing date with the expected effective dates in view, or agree on an interim arrangement under which care is billed only by an entity and a dentist credentialed with that payer.

The letter of intent should name credentialing as a workstream, set a target closing that accounts for effective dates and any 60-day Medicaid notice, and commit the seller to cooperate from signing. The asset purchase agreement should then cover:

• Disclosure: every payer the practice bills, each contract and its assignment and termination terms, and each dentist’s credentialing status.
• Cooperation: the seller signs what payers require and keeps its contracts in force until the buyer’s effective dates.
• Transition services: what the seller does after closing, for how long and at what price, including any interim billing and the handling of pre-closing receivables.
• Medicaid: the change-of-ownership notice, who keeps the Medicaid records that relate to the sale (the seller must, under s. 409.907(4), unless the buyer agrees to), and an indemnity for the seller’s overpayments.

Credentialing is also one of the workstreams in Dental Practice Integration: A Post-Closing Transition Guide.

Start credentialing when you sign the letter of intent, not when you close

Credentialing is paperwork with a calendar attached. The buyer’s entity, its NPI, its Medicaid enrollment and each payer contract have to exist before the claims do, and the seller’s cooperation is easiest to get before closing. Opening a new office raises the same steps with no seller to help (Startup Dental Practice); the deal side is on the dental practice sale and acquisition page.

If you are negotiating to buy a Florida practice that bills dental plans or Medicaid, have the payer list and the timing reviewed before the letter of intent is signed. Schedule a confidential consultation

Frequently asked questions

What is dental insurance credentialing?

Dental insurance credentialing is the process by which a payer reviews a dentist’s qualifications, contracts with the practice, and adds the dentist and the billing entity to its network from an effective date. It happens payer by payer, for both the dentist and the practice’s entity. An NPI alone does not enroll a provider in a health plan.

Do dental insurance contracts transfer when a practice is sold?

Not automatically. In an asset purchase the buyer’s entity needs its own payer contracts and Medicaid enrollment, and Florida Medicaid provider IDs are non-transferable for dental practices. Whether a commercial contract can be assigned depends on its own terms.

Does a buyer need a new NPI and tax ID after buying a dental practice?

In an asset purchase, yes: the buyer’s entity needs its own tax ID and Type 2 NPI, and Florida Medicaid does not allow enrollment under another entity’s tax ID. Each dentist keeps a single Type 1 NPI, which does not change with the sale.

Related reading

• Dental Practices and Florida’s Patient Brokering Act
• Licensing and Permit Requirements for dental Practitioners
• Florida’s Telehealth Laws and Regulations: A Guide for Healthcare Providers and Patients
• Common Legal Pitfalls for Medical Practices and How to Avoid Them

Practice area: Dental Practice Sale and Acquisition Attorney in Florida