Insurance-dependent or insurance-free?
Is it time for you to make a decision for your practice?
Tom M. McDougal, DDS
Dental insurance was welcomed into a large number of dental practices, beginning in the early 1970s. It appeared that indemnity insurance would encourage those patients who needed or wanted dental treatment to have these services performed. Many dentists believed that insurance would enhance their practices financially.
Other, more cautious, dentists began to warn those in leadership positions within our profession of the possible perils to quality that might occur if dental-insurance companies began to determine diagnosis, treatment, and fees for a particular service.
In retrospect, these warnings were lightly-heeded by many of us. Could the insurance industry actually exert that much control over the dental profession? I was sure that if insurance really was that great of a threat to quality care, someone in the ADA in Chicago would sound the alarm.
Like so many encroachments we experience in life, the insurance industry was not satisfied with its influence on treatment plans and fee determinations. Eventually, a larger piece of the pie was requested by the insurance industry in the form of "managed" care.
There are three primary reasons for the metastasis of managed care into dentistry:
- Profit potential for insurance companies.
- Oversupply of dentists.
- A generation of people who have been conditioned to believe that health-care coverage is a "right."
Our practice was required to make a decision a few years ago as to whether we would be an insurance-dependent practice or an insurance-free practice. What precipitated the need for this decisiveness?
- The mounting "ill will" we were experiencing as result of being caught in the middle between the insurance company and the patient.
- Countering the inflammatory information sent to the patient, stating that our fees are higher than usual and customary.
- The fact that insurance companies typically reimburse the patient more quickly than the dentist.
- Insurance companies change mailing addresses and phone numbers often, and we are not provided updated information. The flipside of the coin is employees change insurance companies, and again, we are not notified about the change.
- Patients shift the responsibility to the dental office to find out their benefits (annual maximum, remaining benefits, deductible amounts, etc.).
- Our primary objective is to provide high-quality dental care at a fair fee; the insurance company`s primary objective is to earn a profit for its shareholders. We cannot allow the insurance company to dictate the standard and quality of our care.
- The costs to most insurance-dependent practices (other than goodwill) in handling insurance include: numerous lengthy phone calls; resubmitting information or radiographs two and three times because insurance companies "lost" or "never received" them (even when filed electronically); and excessive paperwork, mailing and redundant billing.
The transition to "insurance-free" for our practice was not sudden. We evolved into this position by initiating a policy a few years ago to file insurance for patients with treatment over $150. For fees less than this amount, we required patients to do their own filing.
We noticed that our accounts receivables dropped from $188,000 to $88,000 in just a few months after putting this policy into effect. When we made the decision to go totally insurance-free, our accounts receivable dropped to approximately $40,000.
In considering a move to become insurance-independent, one must have a definite plan in place to maintain goodwill with the patient base. Excellent verbal skills, especially for the administrative staff, are a must.
The following are some examples of patient objections and appropriate responses:
Concern: "I don`t know how to file insurance!"
Response: "You will simply need an insurance form with your information (name, SSN, etc.) filled out. We will provide a receipt with everything the insurance company will need, including X-rays, photos, narrative, perio chart, etc." Note: If patients still seem concerned, you may invite them to bring the completed insurance form back to you and "walk them through it."
Concern: "I don`t have a claim form."
Response: "Claim forms should be available through your employer-usually from a human resources counselor. We recommend that you verify with them that the insurance company`s address on the claim form is correct."
Concern: "I can`t pay that amount!"
Response: "We offer a payment plan dividing the total amount into three payments- one-third the day of treatment, one-third after one month and one-third after two months. That allows you time to be reimbursed by your insurance company and still have the balance paid before interest assessments begin. A financial company may be used for longer payment arrangements, allowing six months of interest-free payments."
Concern: "They`ll send the check to you anyway."
Response: "If you do not sign for payment to be directed to the doctor, it should be sent to you. However, if they send it to us by mistake, we will immediately endorse it and put it in the mail to you that day."
Concern: "What if they need more information or refuse to pay?"
Response: "The insurance company should contact us by phone or mail if they require more information. We will promptly provide them with whatever is available to answer their questions. If they deny benefits for treatment that is allowed in your plan, it may be necessary for us to send an appeal letter."
Concern: "I don`t like it that you`re not filing. All my other doctors file for me."
Response: "I understand. In the past year, many of the insurance companies have changed addresses, names and/or benefits. They omit important information that is needed for proper filings. We found that we were becoming detectives, trying to obtain all the proper information to file claims. Our primary goal is to provide you with optimal dental care. We are happy to assist you in obtaining the reimbursement due you by providing all the necessary information to help you file your claim."
If your goal is to become insurance-free, the following strategies may help:
- The team member(s) informing the patient of the new policy must be verbally skilled. Role play with real-life scenarios at staff meetings.
- Make sure the clinical staff is committed to providing all necessary data to patients (photos, radiographs, narrative, perio chart, etc.) for filing their insurance. This should be given to the patient after the consultation visit and prior to the treatment appointment.
- Patients must get the message that this transition is for their benefit. Our team members frequently say, "We have found that the insurance companies respond much better to the one who pays the insurance premium."
- Encourage your patients and friends who are company presidents, business owners, etc., to consider direct reimbursement as an excellent alternative to dental insurance.
The battle lines are clearly drawn between the comprehensive, quality-oriented dental practice and the third-party controlled practice. There is no evidence or trend in place to support the supposition that dentistry is headed over the cliff toward managed (mangled) care. Each of us who has enjoyed the blessings of this wonderful opportunity to be of service to our fellow man should have a life creed-"I am going to leave this profession better than I found it.
Tom M. McDougal, DDS, practices in Richardson, Texas, where he has an emphasis in restorative, esthetic and implant dentistry. He is a noted lecturer at courses throughout the United States.
The True Costs of Accounts Receivable
In becoming "insurance-free," yes, we have become very accommodating to our patients in helping them acquire interest-free outside financing from certain finance companies.
At one time, many dentists reasoned that carrying a large amount in accounts receivable was their security blanket. Realistically, if patients bring litigation against a practice, they are almost always the patients who owe on their account.
Let`s look at the true cost of accounts receivable:
Present value $100,000
Inflation <5,000>
Lost investment <10,000>
Billing costs <36,000> ($10 x 360 accounts)
Collection agency
(or uncollectable) <15,000>
True value $34,000
Some dentists charge 18 to 24 percent per annum interest on accounts after 60-90 days. The dental office cannot economically make up for the losses suffered by carrying a large accounts-receivable balance when one looks at the true cost of accounts-receivable.
Develop a Brochure To Explain the Facts About Insurance
Develop a "Facts You Should Know About Dental Insurance" form, similar to the one below, for distribution in your office.
Facts About Dental Insurance
As an optimal-care dental practice, we strongly believe our patients deserve the best possible dental services we can provide. In an effort to maintain a high quality of care, we would like to share some facts about dental insurance with you.
Fact #1: Your dental insurance is based upon a contract between your employer and the insurance company. Should questions arise regarding your dental-insurance benefits, it is best for you to contact your employer or insurance company directly.
Fact #2: Dental-insurance benefits differ greatly from general health-insurance benefits. In 1971, your dental-insurance benefits were approximately $1,000 per year. Figuring a 6 percent rate of inflation per year, you should be receiving $4,549 per year in dental benefits. Your premiums have increased, but your benefits have not. Therefore, dental insurance is never a pay-all; it is only an aid.
Fact #3: You may receive a notification from your insurance company, stating that dental fees are "higher than usual and customary." An insurance company surveys a geographic area, calculates an average fee, takes 80 percent of that fee and considers it customary. Included in this survey are discount dental clinics and managed-care facilities, which bring down the average. The fee-for-service doctor in private practice will have fees that insurance companies define as higher than "usual and customary."
Fact #4: Many plans tell their participants that they will be covered "up to 80 percent or up to 100 percent," but do not clearly specify plan fee-schedule allowances, annual maximums or limitations. It is more realistic to expect dental insurance to cover 35 percent to 65 percent of major services. Remember, the amount a plan pays is determined by how much the employer paid for the plan. You get back only what your employer put in, less the profits of the insurance company.
Fact #5: Many routine dental services are not covered by insurance companies.
Financial arrangements must be made directly with us, regardless of insurance coverage. You will need to file a claim form with your insurance company to receive your benefits.
Please do not hesitate to ask us any questions about our office policies. If you have questions regarding your insurance benefits, please contact your employer or insurance carrier directly.
The Benefits of Being Insurance-Free
Several benefits obviously are derived from being an insurance-free practice:
- Fewer active accounts-It costs an average of $10 to manage each active account per month. (415 active accounts x $10 = $4,150 a month or $49,800 a year).
- You will no longer be working for the insurance company. Yes, a patient may ask you to file a written predetermination for him/her. Our reply is "We will be happy to do this for a $50 fee. You will be credited with this amount when you begin treatment."
- Many insurance-dependent practices have one to two staff members employed to simply file claims, correspond with the insurance companies, write appeal letters, file predeterminations and manage insurance-company accounts receivable. Your staff can better utilize their time in doing more effective procedures than clerking for a group of insurance companies.
- Better patient relationships occur when the dental practice is not perceived as the "bad guy," when the insurance company notifies the patient of limited or no benefits for a procedure. The staff now can focus on taking excellent care of the patient and not on trying to defend the doctor`s diagnosis, treatment plan, and fees.
