The dilemma of collecting balances from patients has troubled dental practice owners for decades. Fifty years ago, it was commonplace to simply bill patients for treatment. Bills went out, and people generally paid. The truth is, fifty years ago, dentists were far less concerned with collections. If they encountered problems, it didn’t affect them significantly as they still had sufficient income. The business challenges (including lower overhead) of running a practice five decades ago were vastly different.
COLLECTIONS TODAY
Collections today are more complex. First, unless you have an all fee-for-service practice, you cannot apply the yardstick of standardizing everything. Dental insurance, which has allowed many patients to receive treatment they might not otherwise have, has created an incredible level of complexity. The number of insurance codes, varying rules, regulations, and reimbursements from different carriers, untrained staff, and a lack of systems have all contributed to this complexity.
For example, one insurance company may reimburse 80% of what another does. They have specific guidelines about how they address the need for a particular procedure. One rejects more treatment than another, requiring more appeals (if appeals happen at all). Your insurance or financial coordinator is often confused and may not even think to go back and resolve certain issues. Money flows in based on the parameters set by the insurance company, and your team may not notice discrepancies or address these issues. These are examples of hidden collection loss.
WHAT IS HIDDEN COLLECTION LOSS?
Hidden collection loss is money the office never collects because it gets lost in confusion and opaque processes. Many times, dental practices feel they are at the mercy of the insurance companies, either not realizing they are losing money or becoming too tired to figure it out and giving up.
Don’t give up. Here are some policies that should be standard in every dental practice that participates in insurance plans:
- Submit a new fee schedule to insurance companies annually or any time practice fees are raised.
- Study, analyze, scrutinize, and compare reimbursement rates from different insurers. Should an insurer be dropped because its reimbursements are too low? Does the insurer ever increase reimbursements? Has the insurer decreased reimbursements recently?
- Does the practice have a standardized appeal process? If a case is rejected, is there an appeal? If a code is downgraded, is there an appeal? How many appeals were submitted in the last 12 months? How many should have been submitted?
- Determine where the insurance company is being difficult and address it. The insurance coordinator or dentist should pick up the phone and contact the Dental Director of that insurer. Don’t be afraid to call often, ask questions, and even complain. The insurance company has certain parameters to avoid fraud, lower reimbursements, and maintain its profit. Doctors have every right to contact Dental Directors and ask them to explain certain decisions made by the insurance company. While Dental Directors must follow rules and regulations, they can provide insights into how to work better with the insurer to reduce hidden collection loss.
None of this is about being confrontational with insurance companies. We all know the situation, and insurance is part of an ecosystem for practices, but it also directly affects collection levels.
INSURANCE COPAYMENTS
For patients with insurance, copayments must be collected upfront. End of story. No exceptions, no variations—this is the rule. Insurance patients who say things like, “Let’s wait and see what insurance pays” are often the ones who don’t pay you down the road. These aren’t hidden collection losses; they’re simply lost collections.
FOR PATIENTS WITHOUT INSURANCE
Patients without insurance are easier to manage in terms of collections. They must pay at the time of service. That said, there are still variables. For example, should there be a deposit for some services? Should there be a deposit for all services? Many practices require deposits for large services but not for small ones and don’t realize how often small services lead to collection problems that are never addressed. Analyze where collections are challenging and add deposits to those cases. Or decide that any case extending over a certain period will automatically require a deposit.
Levin Group has conducted extensive research on the impact of deposits on patient satisfaction and practice finances. A 10% deposit is just as effective as a 30% or 50% deposit in ensuring patients keep their appointments. Regardless of the deposit, the patient needs to know that the balance for treatment is due upon arrival at the practice. This is one way to achieve a 98% or higher collection rate for the entire practice.
SUMMARY
Collections are critical because they create real profit. Every 1% you fail to collect represents a loss of $1,000 for every $100,000 of production. In a $1 million practice, losing 1% means losing $10,000 of bottom-line income. Cleaning up and standardizing the collection process with consistently followed rules will add millions in profit over the course of a career.
ABOUT THE AUTHOR
Roger P. Levin, DDS, is the CEO and Founder of Levin Group, a leading practice management consulting firm that has worked with over 30,000 clients to increase production. A recognized expert in dental practice management and marketing, he has written more than 60 books and over 4,000 articles and regularly presents seminars in the U.S. and around the world.
To contact Dr. Levin or join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit www.levingroup.com or email rlevin@levingroup.com.
FEATURED IMAGE CREDIT: Forest White from Pixabay.
