Patient Financial Policies & Payment Options

Like any other business, a profitable dental practice needs to have written patient financial policies in place before providing treatment. These policies need to be followed through on a consistent basis for the ultimate end goal of increased case acceptance and patient compliance with payments.

If you’re an office that accepts insurance, you will have additional payment policies that relate to co-pays, deductibles, and situations where a patient may be covered by more than one insurance.

As you develop your practice and see more patients, you will need to make changes to these policies depending on certain insurance plans, payment options, etc. You will notice a pattern of certain insurances requiring pre-authorizations for some procedures that other plans don’t require.

For example, if you notice that a certain plan never pays on core buildups, you’re going to present your treatment plan differently to include the full insurance fee for the core buildups as patient’s out-of-pocket responsibility.

When you read your credit card statement, or your electricity bill, cell phone bill – you will notice in very small print that most of us ignore or skip over that says something along the lines of “policies are subject to change without prior permission”.

Same holds true for your practice. As you run into same situations on frequent basis for an insurance plan, for example, you will change the policy on the spot and decide to enforce that policy only for those patients on a certain plan. You’re allowed to do whatever you want as long as it works for you and doesn’t make all your patients angry, AND it falls within your state’s insurance guidelines.

You won’t make everyone happy, there will always be few patients that are unhappy about your fees, your policies, etc. – but remember, it’s part of running your own office like any other business.

Let’s get into few policies that I believe you should have in place prior to seeing your first patient.

Payment Policies

When considering payment policies, it helps to split your future patient pool into two groups: Fee for service (patients with no insurance) vs. patients with dental insurance.

Patients with dental insurance:

If you’re going to accept insurance in your practice, then you need to decide how you plan to collect co-pays, deductible, or any other balance that is not covered by a plan.

You have two options: You can collect the co-pays (including the deductible) at the time of patient visit, or AFTER you’ve sent in the claim to the insurance and received payment for the services by sending the patient a statement of their balance due.

I strongly recommend collecting copays at time of service. What does this mean? For example if your insurance covers 80% for restorative services and let’s say the insurance fee for a filling that you do is $100. If patient has already met their deductible, then expected insurance coverage is $80 and patient copay due at the time of service will be $20.

If you decide to not collect the copays at time of service, you’re setting up a delay in the collection process. Here’s what I mean:

If you’re working on multiple composite restorations, for example, then at the end, patient will pay nothing because you have to generate the insurance claim and then wait to get paid for the service. Once you receive the claim and enter the payments into the Practice Management system, you then generate a statement that shows their balance due for that visit and then print, mail, and stamp – which now cost you your staff’s time and money. Remember, you’re already paying for electronic claim service – now you’ve added on an extra cost of MAILING a statement for each encounter for a patient.

Don’t think just because you’re sending a statement, you will receive payments on time. Now you need to have your staff follow up with patients who haven’t paid on their balances due.

So by not collecting the patient balances at time of service, you’ve actually increased the work for your team members – which takes time, time which could’ve been spent on keeping the schedule full, or other revenue generating activities.

From day one, stick to collecting at time of service.

Ninety nine percent of your patient will NOT have a problem with this policy. Some will mention, “can you just bill me after? because my previous dentist never collected. ” You must train your team members to handle such situations to politely enforce your policy of collecting at time service.

Even after doing so, you may have very few patients that just do not want to pay at time of service and would rather wait to receive the EOB from their insurance company. This is totally fine. After 5 years into my startup, I can recall about 5 or 6 patients that we mail statements for and collect after.

For procedures that require multiple visits, crown/bridge, implants, over-dentures, etc., I will get into detail in part II of this post of how to best estimate insurance payments for these services and how to set up payment options for these patient.

Patients with dual insurances – Primary & secondary dental insurance coverage:

Let’s consider the situation when a patient is covered by more than one insurance. This happens quite often, usually a member is covered by their own plan (primary coverage) as well as their spouse’s insurance (secondary coverage).

When you provide a service for a member that has dual coverage, a claim is sent to the primary insurance first for that service. Once the claim is paid from the the primary, a claim is now generated for the secondary coverage.

To process this claim, the secondary coverage needs the EOB from the primary insurance. Once your team member has scanned in the primary EOB into the patient’s chart, you should utilize your electronic attachment software to generate the attachment to send the scanned primary EOB.

From the time you provide the service to the patient until the time you receive payment from the secondary insurance, you should expect about 24-30 days in terms of processing. With some plans, it may take longer.

There are three different ways you could set up your payment policy when it comes to dual coverage:

  1. Collect at the time of service the deductible and appropriate copay as indicated by the primary coverage assuming NO secondary coverage
  2. Collect at the time of service ONLY deductible for both primary and secondary coverage
  3. Collect nothing at the time of service and wait until both claims go through (25-40 days) of processing. If there’s a balance, then send a statement to the patient for any balance remaining.

All the options above assume that your team is verifying all benefits from both primary and secondary insurance and it’s on file, so you know what coverage and deductible amounts are for different services (Preventive, restorative, endo, etc.)

I’m not a fan of option #3, so I never do it as I indicated before that I stay away from sending statements and always try to collect on the day of service.

I have done both option #1 and #2. With option #1, patients do complain and resist when you ask them to pay because they assume that because they have dual insurances, they should have ZERO out of pocket – which is not always true.

Over time, I’ve found option #2 works best in my office.

In my office, we do not collect anything on preventive services. If the patient needs any work, and if the patient’s primary plan has a deductible for any work performed, then we collect the deductible only (for both plans) at time of service and do not collect any other co-pay. We simply wait to get paid from both plans and make sure both payments add up to what we expect to get paid for the services provided.

I’ve never had any problems with patients’ insurance not paying when doing it this way. You may choose to do it differently. For example, if patient comes in for crown, you may choose to collect their deductible & copay according to primary insurance coverage and assume there’s no secondary coverage. Once you get paid from primary and you send the claim to secondary, you will have credit on the patient’s account when the payment comes in from the secondary.

Don’t rely on your practice management systems to calculate this accurately. So I do this manually, and it’s nothing complicated.

For preventive services (exam/cleaning/xrays), send it to insurance plan. Once the claim comes back, send it to secondary. There’s usually never an out-of-pocket for a patient for most plans for primary – unless of course, the primary and/or secondary have deductibles that apply to preventive services.

If you find that both primary and secondary have a deductible on preventive services, then collect the deductible at the time of patient’s visit.

If you don’t under the topic of primary and secondary insurance coverage and how it works, I will cover this under basics of dental insurance posts in the future.

Inactive Insurance situation:

When you’re starting out, you’re building up your new patient base. For patients with insurance, you will be verifying their benefits PRIOR to their visit at all times, unless it’s a walk-in.

However as you start to do your first round of recall patients that come back for their routine examinations and cleanings, there may be a change in patient’s insurance.

Patient could have a completely new plan, or the same plan in which their group number may have changed. There is a possibility that they no longer have insurance coverage.

You will find a lot of times patients forget to tell you they have new insurance, or their insurance terminated just a month ago.

I have a policy set in place where patient balance must be taken care of within 45 days from the time of service either by giving us valid new insurance info, or paying the balance in full if no longer insured. Otherwise, the account balance will go to collections.

I’ve found that most patients just are too busy dealing with other stresses of life, that they either just forget about their HR department at their employer telling them of the change in insurance or group, or are not even aware of such changes until we let them know their insurance was terminated at time of service.

You may be thinking why I don’t have my team check if insurance is active for all recall patients everyday. Simply because it’s just too much work. I get only a few patients a month my front desk has to follow up with regarding termination of benefits or change in insurance plans after the patient has already gotten the service.

If this happens, we get in touch with the patient and let them know and it’s usually resolved within a 7-10 day period. This is much less work than verifying every single patient coming in for recall with the hygienist or the doctor.

If we have a patient returning to the office after more than a year, my front desk will log into the online portal of the most recent insurance on file and make sure the patient is active.

Fee for service patients:

For patients with no insurance, it’s much simpler. Simply go over the treatment plan in the practice management software and letting them know payment is due at time of service.

For services that require multiple visits such as crown & bridge, we collect 75% of total due at time of preparation & impression, and the balance at insert.

Payment options:

Most patients will be paying with credit cards, so this is an option you definitely want to offer through an established merchant account with either your bank or various other 3rd party merchant account services.

Patients will want to provide payment in form of a check. Be careful when accepting checks from new patients. I can recall two patients whose checks bounced after we tried to deposit them into the bank. Unfortunately, they were both for new patients. After trying to reach out to them numerous times, the balance is still in collections. Since then, I do not accept checks from new patients and do so only with established patients.

Third party Payment plans: 

These third party payment plans will, upon credit approval, split the total cost of the treatment fee into 6, 12, or 24 months interest free as long as the patient makes monthly payments and pays off the balance within the promotional period.

By making it easy for patients to pay, it helps you increase your case acceptance rate – but of course, at a cost.

The company will charge you a % of the amount financed at the time a transaction actually happens. The percentage will depend on the promotional period you offer to your patients – more time you give your patients to pay, more you will pay per transaction.

I don’t have a lot of patients going through payment plans, but ones that do, I offer 6 month payment plans for anything more than $500 out of pocket. From $2000 and up, I offer 12 month. For anything more than $4000, I offer 24 months. I don’t have these rules set in stone – depending on the patient, there are times I’ve offered 24 months for $2000 out of pocket also.

Two big companies are CareCredit and LendingClub. I’ve gotten away from using LendingClub since I get a lot more denials of credit for patients, so I end up using only CareCredit now.

In-house Financing:

Collecting payments from a patient for a service over a certain time period is referred to as In-house financing. You’re not going through a third-party company. You’re taking on the risk of patient not making their payments according to their payment plan, even after you’ve delivered on the service.

For multi-appointment procedures such as a crown, for example, we collect 75% on the day of the preparation and impression and the rest on the day they come in for final crown insertion. By doing that, I’ve provided financing to the patient.

When I first started out, for first six months, I actually offered patients to pay over 6 months even for a crown. I had them sign off on a “Payment Plan sheet” – that outlines the payment amount and how it’s to be collected every month. We always collected a credit card number and saved it on file, and my front desk would charge the card for the agreed amount every month until the account was paid off.

This all worked until the work increased on our end – Saving credit cards on file, maintaining a schedule of patients and payment amounts to be charged on a separate Excel file, emailing/texting and/or mailing the patient the credit card receipt when their account was charged.

There were some problems also: I recall for two patients, they ended up getting new credit cards and forgot to inform us. So now my front desk has to track down the patient and play phone tag to get them to give us the new credit card info, so we can continue charging the account as agreed prior to starting treatment.

Another problem is if the patient cancels their credit card and never makes the rest of the payments. This now has to go to collections, and any unpaid debt has to be written off.

I stopped offering it after the first year. There are some patients that have been with us since day one when started, and once in a while, I’ll allow them to pay over two months. So I only offer to established patients, but never new patients.

Prepayment discount:

I used to offer it during the first year I was open, but then I stopped offering it because I found it doesn’t really affect the patient treatment acceptance rate.

The whole point of the prepay discount is to have the patient commit to moving forward with everything you’ve listed on the payment plan, so they don’t stop coming in the middle of treatment.

Here are some reasons why I no longer offer the prepay discount:

  1. PPO Insurances: If your office accepts insurance, you’re already taking a write-off in range of 30-45% or even higher in some super low reimbursement plans. By offering prepayment discount, you’re taking another 5% (assuming that’s what you’re offering) off of that.
  2. In-office membership plans: If you’re offering your own in office membership plan, you’re probably offering 20-25% discount off of your normal offices fees. Again by offering prepay discount, you’re extending that discount another 5%.
  3. Life changes: We all have changes in our lives that affect our spending habits. For patients, they may lose a job or change insurances. If a patient started with you on a plan you accept, prepaid for all treatment – and now end of the year, patient’s company offered a plan you don’t accept in your office. What happens then? It adds another layer of “complexity” and figuring out of what will need to be done in that situation.
  4. Most patients don’t want to pay the full treatment plan fee in advance for only a 5% discount. When I offered it, they asked for more discount. I always steer clear of these situations when it comes to patients trying to bargain.

Financial Agreement Template:

Do not make it complicated. Remember to keep it simple and ONE page only. At previous associateships I used to work in, I’ve seen financial agreement forms that were 2-3 pages.

Don’t introduce more hurdles when patient is trying to make a decision of moving forward with treatment.

Imagine this: you’ve just created a treatment plan for your new patient. It may have 2-3 different phases in the treatment plan. You’ve just spent 30 minutes of your time explaining the clinical importance of the plan for their oral health while assuming patient is actually understanding everything you’re saying.

In my office, I discuss the finances right in the dental operatory after I’ve finished going over their treatment plan.

In your office, you maybe handing over the patient to your treatment coordinator who will discuss finances. Now this patient is going to have to understand all the different policies and options over 2 pages – can you imagine the overwhelm?

I can spend hours talking about case acceptance, presenting treatment plans, etc. Every doctor does it differently, and that’s a subject for a whole another post. But for now, split your treatment plans into phases and for each phase, keep your financial agreement to one page and as you move forward to another phase of the plan, just use another agreement form.

I hope this was helpful in helping you understand what you need to think about when coming up payment options and payment policies before you start seeing patients. This is important whether you’re starting your dental office from scratch or buying an existing practice.

For the next post, I’ll get into how I do payment options for patients who have larger treatment plans that involve multiple appointments that span over weeks or months. I’ll also provide templates that I’ve come up with that I use over and over with different patients.