Class 5: Dental Coding and Billing
Accept Insurance?
Insurance dates back many years and has evolved. Patient perception of insurance continues to evolve and it is the dentist's decision whether or not to accept insurance plans, which plans and under which negotiated constraints. Dental insurance is different than medical insurance. For medical insurance a catestrophic medical event has the potential to bankrupt a family, however a catestrophic dental issue will not. In addition, most dental plans will have limits as to how much they will cover per year. Therefore, current dental insurance can be thought more as a discount plan.
Medical insurance has kept up fairly well with inflation rate for payment coverage, however dental insurance reimburses dentists the same rates that were paid in the 1990s. So, why would a dentist want to take insurance given all of these constraints? Some explanations are that insurance is free advertising and some patients will expect that their dentists takes insurance.
Insurance Plan Types
There are multiple types of insurance plans. The most common types of plans are fee for service, DMO, PPO, indemnity plan, and the self-insured.
Fee for service: This is the most favorable to the dentist. It most likely will cost more out of pocket for the patient.
Traditional indemnity: These are not very popular and not frequently seen anymore. They will need the dentist to pay up front as treatment is being done then wait for reimbursement from the insurance company.
PPO: This stands for preferred provider organizations. They are the most common insurance plans seen these days. The dentist agrees to accept the negotiated fees with the insurance company. There are a number of codes for treatment that are not negotiated and left out of the agreement to reduce cost to the employer. This can cause conflict between dentist and patient since these codes are "not covered by insurance" and some patients will only want procedures done that are covered by insurance.
DMO: These plans do not allow the patient to choose their dentist. If the dentist has not signed up for the DMO plan the insurance will not cover any of the cost of the dental work. The reimbursement fees that the insurance company will pay to the dentist are typically much lower than a traditional or PPO plan.
Direct Reimbursement: Some patients will give the patient an allowance for the year. The patient is able to use this money for dental expenses. If the dental expenses exceed the maximum allowance then the rest of the money would be out of pocket for the patient.
Membership plans: Dentists can create their own membership plans and offer discounts off their dental work if the patient pays a flat fee per year. Since insurance is highly regulated it is important that the dentist avoid claiming that this is insurance and there are other processes that the dentist needs to be aware of before starting a plan like this. This is closer in line with medical field that offers concierge medicine.
Medicaid: This is a service provided by the government that helps younger patients or special needs patients are able to get dental work completed. The plan fees are much lower than a typical fee schedule and this is why a number of dentists will avoid providing this medicaid service. There is also a large amount of paperwork involved to participate with medicaid.
Insurance Coding
Each dental procedure has a CDT code. These codes are owned by the ADA and they are the only organization that can make changes to these codes. Click here to see the CDT book on the ADA website.
Submitting Insurance Claims
How do you know which code is covered under the patient's insurance plan? How do you know how much money the insurance company will pay you as the dentist for that code? What will you tell the patient about how much the procedure will cost them? To find out this information dental offices will use insurance verification to determine what the benefits will be prior to the patient coming into the office. The dental office can verify the insurance or hire a 3rd party company to do this.
After the dental procedure is completed the code gets submitted to the insurance. You can use the ADA's claim form which is a standardized form or use software to submit the claim. The insurance company will decide whether or not they will cover the procedure. It is important as a dentist to train staff well to ensure that no small details are missed that can delay payment or in some cases if incorrect accuse you of fraud.
Click here for some examples of how a claim should be filled out and what information to include.
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Insurance Contracts
Insurance companies will present a "menu" of available plans to an employer. This "menu" will cover a limited number of services that the company is willing to pay for. Therefore, when the patient signs up for their company sponsored dental insurance plan the patient has a contract with the insurance company. The dentist also will have a contract with the insurance company. The contract between the dentist and insurance company will determine the cap of payments for each procedure and frequency of benefits. The specific contracts will dictate the amount that the dentist will be reimbursed for providing the service to the patient. It will also dictate the amount that the patient must pay to the dentist if anything.
Class Question:
Insurance Today
Today insurance is usually not completed by paper or through snail mail. Usually dental providers submit a claim electronically and use an electronic clearinghouse. Negotiating fees depends on location and services offered. For instance in a small city if you are the only dentist then insurance companies will be more willing to negotiate, however if you are in an area of high competition the insurance companies will be less willing to negotiate aspects of the contract.
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Insurance Terminology
Here is some more insurance terminology:
Deductible – Fee paid before any percentages are assigned
UCR – Usual, customary and reasonable fee based on demographic averages
Insurance Write-Off – The difference between the dentist’s fee and the allowance by the insurance company
Annual Maximums – The maximum amount of money to be paid for treatment during the calendar or fiscal year.
Open panels – Patient may choose any dentist.
Coordination of Benefits – If the patient/family has more than 1 insurance plan, there are rules as to which company will pay first and whether the second insurance company will pay based on the original claim or the balance left after the first insurance company pays
Copay – The patient’s percentage of the bill
Predetermination – This is a test run for finding out what the insurance company might pay for a procedure before the procedure is done. Usually associated with more expensive procedures. Until last year, it was no guarantee of payment.
Plan Exclusions – Limits set by the plan contract covering replacements, frequency of treatment and age of coverage.
If you are interested in learning more about insurance please consider participating in an insurance elective with Dr. Kathy Gibson.
Other resources are:
3) American Dental Association
Financing
There are three basic types of financing in the dental office:
1) Insurance
2) Third party
3) In-office financing
Any part of the dental treatment could be financed, however it is important that only payments that should be accepted are those pertaining to dental treatment completed in your office.
An office financial policy should be setup and signed by each patient. Insurance is considered financing and there is a contract that a dentist will sign to accept a discounted fee for patients signed up with the insurance plan. In the state of Texas insurance companies are required to provide notice of claim within 30 days, however this does not require the insurance company to pay the dental office within this amount of time.
Third party financing can come from sources that the patient already has like a bank account or credit card.
In-office financing is where the dentists acts as the bank. Therefore, if a patient defaults on a payment the dentist takes the risk. Banks use credit reports and other forms of information to understand the financial risk they are taking when loaning money to an individual, however the dental office typically does not have these types of capabilities.
Collecting
Accounts receivable is the money that is owed for services given but not paid for. The money may be owed by the patient or the insurance company. The worth of the debts are based on the age from the date of service. So, debts from 0 to 30 days is typically worth 95% of face value compared to 50% after 91 days. This comes into importance when understanding how important it is to collect money within 30 days and if buying/selling the accounts receivable with an office purchase.
If collecting the money is no longer an option or the effort to collect is greater than the money owed, then a dental office can write off this balance. To avoid writing off balances and having a low collection rate it is important to have office financial policies. Some office policies that can help are collecting money prior to treatment, having patients understand office financial policies, err on over quoting of fees than under quoting fees.
Self-Assessment
Please use this self-assessment tool to see your understanding of the material. Click on the answer that you feel is the best. If you choose the incorrect answer you can use the arrow on the upper left or click "try again" to go back to the question.
