How to Read Your PPO Write-Off Report (and Find the Plan That Costs You Most)

Key takeaways

• Production, adjusted production, and collections are three different numbers, and only one of them tells you what a PPO plan really costs you.
• The eight-step math turns a stack of EOBs into one number per plan: lost revenue per year.
• The PPO calculator's break-even rule is exactly the write-off percentage, no more, no less.
• Ranking plans by lost dollars is the first cut, not the final answer.

Every practice I have ever looked at has a production report that makes it look busier than it is paid. The chairs are full, the schedule is packed, and the deposit at the end of the month is smaller than the day would suggest. Nobody built that gap on purpose. It happened one PPO contract at a time, usually a contract nobody has revisited since the day it was signed.

I have sat with doctors who can recite their overhead percentage to the decimal and have no idea which insurance plan is actually costing them the most. Not because they are careless. Because that report does not exist by default in most practice management software. You have to build it, plan by plan, code by code.

This is that report. If you have not read the stay-or-go decision yet, start there for the big picture; this article is the measurement half: how to build the numbers that feed that decision, one plan at a time.

Production, adjusted production and collections are not the same number#

Production tells you how busy you are; adjusted production tells you how paid you are. Collections tell you whether anyone actually sent the check. Three different numbers, and most owners only ever look at the third one.

Production is the full-fee value of everything you did, regardless of who is paying for it. Adjusted production is that same work after each plan's contracted write-off comes out: the number your software should show once every fee schedule is loaded correctly. Collections is the cash that actually hits the account.

Take one plan, one month:

	This month
Gross production (full-fee value)	$45,000
Adjusted production (after this plan's write-off)	$28,800
Collections (what hit the bank)	$27,900

Illustrative example. The $900 gap between adjusted production and collections is not the PPO's contracted discount. That was already taken out to get to adjusted production. It is either a claim still in process or a genuine underpayment, and it is a different problem with a different fix. See how to audit an EOB against your signed fee schedule for that half of the picture. This article is about the first gap: the one between production and adjusted production, which is the write-off you agreed to when you signed the contract.

Pull the three-month report#

Confidence here comes from one report, run correctly. The first four steps of the math I use with my own offices:

1. Pull a three-month production report broken out by PPO, by doctor, and separately for hygiene. Three months smooths out one slow week or one unusually large case that would throw off a single month's number.
2. Average the monthly production for each plan from that report.
3. List that plan's top ten procedures by volume. For each one, write down your full fee and the plan's allowed fee, and calculate the percentage discount.
4. Multiply that average discount by the plan's average monthly production. That is the money left on the table each month for that plan. Multiply by twelve for the year.

Steps five through eight (the ones that decide whether you can actually afford to act on the number you just built) are their own article: Which PPO Should You Drop First?. Finish the measurement first.

The top-10-code comparison, worked#

Here is what step three looks like filled in. Most of the fees below are illustrative, chosen to show the method, except the crown row, which is a real example I use to teach this: a $1,500 full fee against an $800 PPO allowed fee.

Code	Procedure	Full fee	Plan allowed	Discount
D0150	Comprehensive exam	$95	$65	32%
D0274	Bitewing X-rays (4 films)	$75	$50	33%
D1110	Adult prophylaxis	$135	$85	37%
D2391	Composite filling, 1 surface	$225	$150	33%
D2740	Crown, porcelain/ceramic	$1,500	$800	47%
D2950	Core buildup	$250	$160	36%
D3330	Root canal, molar	$1,100	$700	36%
D4341	Periodontal scaling, per quadrant	$325	$210	35%
D7140	Extraction, simple	$210	$135	36%
D1206	Fluoride varnish	$55	$35	36%

Average that discount column and you get the plan's write-off percentage, in this table, about 36%. In my experience that lands between 30% and 40% for most PPOs once you weight it across your top ten codes; direct contracts with the largest carriers often run 40–50% below full fee. If your number comes back wildly outside that range, recheck your fee schedule entry before you blame the plan. It is usually the data entry, not the contract, that is wrong.

What the lost-revenue number means over a year#

Take the plan from the table above and give it a monthly production number: $45,000, illustrative, across everything that plan's patients had done that month, not just the top ten codes. At a 36% average discount, that is $16,200 a month you are not collecting relative to your full fee: $194,400 for the year.

That is not money the plan is stealing from you the way an underpayment is. It is the discount you agreed to when you signed the contract. But agreeing to it once does not mean it is still the right number to be agreeing to, especially if your costs have moved and the plan's fee schedule has not.

How the calculator's break-even rule works#

Once you have that annual figure, the next question is whether dropping the plan would actually leave you ahead. That is exactly what the PPO drop calculator answers, and the math behind it is simpler than most owners expect: your break-even patient loss is identical to the write-off percentage you just calculated.

A plan discounting you 36% can lose you up to 36% of its patients before dropping it leaves you worse off than staying in network, because the patients who stay start paying your full fee instead of the discounted one. Two conditions have to hold for that to be true, and the calculator does not pretend otherwise. It assumes the patients who stay actually pay full fee (cash, indemnity, or a plan you are still in), and it gives you no credit for the chair time you get back from lighter paperwork and fewer denials. Both of those tend to work in your favor in real life, which makes the calculator's number a conservative one, not an optimistic one.

Rank every plan on one page#

Run the same math for every plan you are in and you get one page that ranks every PPO by what it is actually costing you. Illustrative example. Plug in your own reports:

Plan	Monthly production	Avg. discount	Lost revenue / year
Plan A	$60,000	22%	$158,400
Plan B	$45,000	36%	$194,400
Plan C	$20,000	41%	$98,400
Plan D (leased network)	$15,000	28%	$50,400
Total			$501,600

Four plans, ranked by lost revenue per year. Illustrative example: the numbers are for teaching the method, not a real panel.

Ranked by dollars alone, Plan B is the biggest problem here, not Plan A, even though Plan A sends more monthly production. Its discount is just smaller. That is usually the surprise in this exercise: the plan that feels worst at the front desk is rarely the one costing the most, and the one costing the most is rarely the one anyone has complained about.

Dollars are the first cut, not the last one. A plan can top this ledger and still be the wrong one to touch first, if it is also your largest patient base, your easiest plan to administer, or a real source of new-patient growth. Weighing those factors against the write-off number is a separate exercise (see Which PPO Should You Drop First? for the fuller scoring framework), and it is worth doing before you act on this ledger alone. If you want this report to live somewhere your team checks every week instead of once a year, build it into your weekly profitability reporting.

Do this Monday#

You do not need new software to start this. You need three months of history and an afternoon.

• Pull a three-month production report by plan, by doctor, and by hygiene.
• For your two or three largest PPOs, list the top ten procedures and compare full fee to allowed fee.
• Calculate each plan's average discount, multiply it by monthly production, then by twelve.
• Put every plan on one page, ranked by lost revenue per year.
• Run your worst two or three plans through the PPO drop calculator before you decide anything.
• Do not act on the ranking alone. Read Which PPO Should You Drop First? before you tell anyone on your team which plan is going first.