Managing Finances

ADA Guidelines for Practice Success™ (GPS™)

Best practices

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ADA Guidelines for Practice Success™ (GPS™)

Managing Finances

While every practice should follow the appropriate financial protocols, dentists who operate all-cash practices must make certain that their accounting procedures are well-documented, double-checked and beyond reproach.

Consider offering a cash payment plan to patients who need extensive treatment and who have consistently paid their bills on time.

Patient Direct Pay Practices

Some dental practices are essentially all-cash operations, meaning that no outside or third-party method of payment, such as assignment of payment to the patient through a third-party benefit administrator, is accepted. Patients who have some type of dental benefits are responsible for filing claims on their own in order to receive reimbursement for the cost of dental care received. These patients may have a Health Savings Account (HSA) or Flexible Spending Account (FSA) which allows them to allocate pre-tax dollars to pay for certain healthcare expenses. Patients with these types of accounts typically pay for treatment directly and request documentation that they can submit in order to be reimbursed from the account. It is up to the patient to confirm that the care provided qualifies for reimbursement under the provisions of the Internal Revenue Service (IRS).

While every practice should follow the appropriate financial protocols, dentists who operate all-cash practices must make certain that their accounting procedures are well-documented, double-checked and beyond reproach. Not only is this a financial best practice, it’s also an effective way to protect your practice from possible embezzlement; all-cash practices sometimes lack the documentation and paper trail that’s created when claims are channeled through third-party payment mechanisms. This paper trail offers a certain, although limited, amount of protection against embezzlement.

Most practices that accept cash payments request — and receive — payment in full at the time of treatment. This protocol often reduces the number of cancelled appointments since patients are already financially committed, recognize the benefits of their care, and recognize the link between their investment and their treatment.

Remember, cash in hand is ideal, but if there is recurring billing you should have a protocol in place that tracks collections daily, weekly and monthly, no exceptions. There are software programs today that can do that for you, but it’s important to understand how the software works so you can be certain that the proper accounting practices are being followed and that what you see in the books matches what your financial person tells you.

Consider offering a cash payment plan to patients who need extensive treatment and who have consistently paid their bills on time. This arrangement allows credit-worthy patients to pay for a portion of their dental work up front as a down payment; the typical amount is generally one-third to one-half of the total cost. It also ensures you can cover any fixed costs, such as lab bills and standard overhead, while simultaneously offering reliable patients a little latitude in paying for treatment. Under this arrangement, the patient makes several payments of a fixed amount on a regular schedule.

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ADA Guidelines for Practice Success™ (GPS™)

Managing Finances

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payment of a dental benefit. Each statement should include a due date. Past due statements should include a tactful message letting the patient know that his or her account is in arrears.

Accounts that are more than 30 days past due require extra attention. In these cases, the best approach is to have your financial coordinator, business administrator or office manager contact the patient by phone to request payment. No one likes to make — or receive — this type of call. But this approach usually works well because patients are talking with someone they’ve met and connected with in person. One of the ways to make this phone call more successful is to be proactive. Inform the patient who is establishing a payment plan how you handle the balance in the event that the expected payment does not arrive as planned. Let the patient know that a phone call will be made five days after payment is due.

Ideally, these types of calls should be made by someone who has had communications training and is familiar with federal and state collections laws. That person also should have the skills to balance a friendly and concerned demeanor with a commitment to resolving the situation. This isn’t as easy as it sounds. There needs to be kindness and courteousness, blended with a firmness that accomplishes the collection.

Even when you choose the right team member for the task, that person still needs time and resources to perform these important duties effectively. Make sure your collections person is able to make these calls in a private setting so the conversation isn’t overheard by other patients or staff. Also make certain that team members has enough time to make calls, prepare and mail any follow-up letters, and document the effort. Consider providing this staff member with training, such as a CE course, video or webinar that is specific to successful collections.

Never let accounts with outstanding balances become dormant. If you haven’t been able to collect a payment after mailing a statement and making a friendly phone call, you’ll need to try other approaches. Some practices find it helpful to send a series of collection letters which, while friendly and professional in tone, escalate in intensity the longer the past due amount remains unpaid. Issue these letters on a predetermined schedule, such as every two to three weeks. Follow up on the initial statement and reminder phone call with a reminder notice. After that, move to a negotiation process and then a final letter detailing what steps you will take in order to receive payment. Again, make sure every communication is professional and nonjudgmental. Each should simply be a dated, factual recounting of the collection process with notation as needed.

While you might be tempted to hire a collection agency or file a complaint in small claims court, consider the possible ramifications of either action. Never make these types of decisions in haste or in anger and never threaten action you might not be willing to take. Keep in mind that suing a patient or sending an account to a collection agency could become a public relations nightmare that

Make sure your collections person is able to make these calls in a private setting so the conversation isn’t overheard by other patients or staff.

Accounts that are more than 30 days past due require extra attention.

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ADA Guidelines for Practice Success™ (GPS™)

Managing Finances

Date

Patient NameStreet AddressCity, State Zip

Dear [InsertPatient’sFirstName],

Thank you for your recent office visit. Our office has received payment from your dental benefit carrier for your dental treatment. However, due to the limitations of your dental plan, only a portion of the bill was covered. The balance of your payment is [amount]. According to the agreement you signed before you began treatment, you are responsible for this remaining balance.

Please send this amount to our office as soon as possible. If you have any questions, contact your dental plan carrier, your human resources department or our office at [officenumber]. Again, it is our pleasure to provide you with outstanding dental care.

Sincerely,

Dentist’s Signature

SAMPLE COLLECTION LETTERS

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Managing Finances

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Patient Financing Options

Sometimes the cost of a patient’s treatment plan is higher than the patient expected, even with the cost-sharing available through their dental benefit plan. Patients who don’t budget for dental treatment may have concerns about costs that may cause them to postpone treatment or to decide against it.

Many practices offer internal or external programs to help patients finance treatment. Knowing there are options to finance dental care often increases case acceptance rates and can significantly reduce the amount of time patients need to make a decision about proceeding with treatment.

When managed properly, financing programs make good business sense for your patient and your practice. Regardless of which approach you take, it’s important to be selective about which options you offer to which patients.

It’s also important to be aware that certain financing programs could result in the practice being considered a “lender,” especially if in-office payment plans offer patients more than 90 days to settle accounts. Complying with truth and lending regulations, which exist at both the federal and state levels, can be an arduous and complex process. For these and other reasons, many practices opt to out-source financing and payments to a third party.

Make sure you adequately educate your staff about the benefits and requirements of any financing options available in your practice. It’s also prudent to develop and follow a written policy that details the options available and the protocols for having financing discussions with patients.

Any payment option offered through your practice should meet the needs of your patients. After all, the reality is that for many patients, the decision to proceed with dental treatment comes down to how much they can afford to pay. While any financing options you offer should respect your patients’ financial commitments, you also have to ensure that you can meet your overhead expenses.

Finally, remember that patients’ financial health can change unexpectedly. Patients who didn’t need to finance treatment in the past might need to do it today. And some patients may want to finance treatment for what many might consider “modest” out-of-pocket costs.

Internal Financing While you might want to do everything you can to help each patient cover the cost of treatment, in-office financing should not necessarily be offered to every patient. Criteria to consider before discussing this option include your relationship to the patient, the patient’s ability to pay, payment history, the type of work being done, and the value of the treatment plan. Managing a

When managed properly, financing programs make good business sense for your patient and your practice.

...for many patients, the decision to proceed with dental treatment comes down to how much they can afford to pay. SAMPLE

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ADA Guidelines for Practice Success™ (GPS™)

Managing Finances

PAYING FOR YOUR DENTAL TREATMENT BROCHURE

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Managing Finances

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ADA Guidelines for Practice Success™ (GPS™)

Managing Finances

Many of your patients may have some form of dental benefit coverage. In fact, in 2013, 191.4 million Americans, or 61% of the U.S. population, were covered by a dental benefit plan according to the National Association of Dental Plans (NADP) 2014 State of the Dental Benefits Market. Dental benefit plans vary considerably in terms of what they cover, treatment limitations, reimbursement rates and fee schedules.

In many practices, a significant percentage of patients direct the financial coordinator to “bill the dental plan” and then pay the balance due directly to the practice. Some patients may automatically assume their dentist is a participating provider in their dental benefit plan.

While reading — and understanding — the specifics of any contract is critical in any situation, this advice is particularly important when you’re evaluating whether or not to become a participating dentist for a third-party plan.

Before you consider signing on as a participating dentist in any new dental benefit plan, make sure you review the demographics of your current patient base, the demographics of the potential new patient base, and your available capacity to treat new patients. Also carefully consider the possible financial implications of the fee schedule offered by the new plan. The ADA offers members a free Contract Analysis Service (CAS) to help you understand the contract. Take advantage of this important member benefit by providing your state dental association with a copy of your unsigned contract and a request for analysis. Please keep in mind that this service is not intended to serve as legal advice, but rather a tool to aid members in understanding and analyzing proposed contracts. Contact your state dental association for information on how to access this member benefit.

Some plans have time-consuming credentialing requirements that must be fulfilled in order to join them. Make certain you allow sufficient time for the credentialing process to take effect if you choose to join the plan. Be sure to carefully review the requirements for terminating the agreement, since leaving a plan may require you to follow some very specific and complicated exit protocols.

Pay close attention to language in the contract that discusses developing and supervising patients’ treatment plans; you, as the dentist, should have full authority and control.

Dental Benefit Plans

Dental benefit plans vary considerably in terms of what they cover, treatment limitations, reimbursement rates and fee schedules.

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ADA Guidelines for Practice Success™ (GPS™)

Managing Finances

Risk Management

Every year, the ADA receives calls from members about risk management matters, some of which involve complicated legal issues. Most often, members want advice about how to protect the practice from the possibility of lawsuits filed by patients who believe they’ve been wronged. Sometimes, members want help in identifying the type of attorney in their jurisdiction to contact and for guidance in determining how to select the right one. Any dentist who believes he or she may be sued has a duty to inform his or her liability carrier of the incident; the carrier has no duty to defend the alleged or actual claim if they have not been notified by the policy holder.

Risk management starts with what information you enter into the dental record. The dental record, or patient chart, is the official document that houses all diagnostic information and clinical notes. Complete information about all treatment performed and the patient-staff communications that have taken place in the dental office, such as instructions for home care and consent to treatment, is included. State and federal laws or regulations and state boards of dentistry determine what information is entered there, how and where it is maintained, what safeguards should be in place to protect the information, how long it should be kept, and who should have access to the information. The dental record also ensures continuity of care for the patient. More information is available in “Dental Records,” an online publication developed by the ADA’s Council on Dental Practice and Division of Legal Affairs and available free to ADA members.

Information contemporaneously entered into the dental record can oftentimes help you defend yourself if a patient files a malpractice claim against you. While the fear of being sued should not be the primary motivator in determining what information you enter there, ensuring that you record appropriate professional information in each patient’s chart every time is critical to protecting your practice.

Risk Management and Fraud Prevention

Risk management starts with what information you enter into the dental record. The dental record, or patient chart, is the official document that houses all diagnostic information and clinical notes.

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ADA Guidelines for Practice Success™ (GPS™)

Managing Finances

For example, in dentistry, a charge of fraud, either civil or criminal, can be brought against a dentist who signs off on notes in a patient’s record that inaccurately claim procedures that weren’t performed. The best way to prevent this from happening is to carefully review and confirm the information in each patient’s chart before signing off on it.

Fraud can also be committed against the practice itself by unscrupulous staff. One way to safeguard your accounts is to have one employee process only accounts payable and another process only accounts receivable, with neither involved in the other side of the money trail. Allowing one person to handle both functions makes it easier for them to juggle the books and hide the details of any money they’ve siphoned from the practice.

If an unscrupulous staff member commits fraud against a government program like Medicaid, a dental practice with a compliance program in place will be better able to defend itself. The U.S. Department of Health and Human Services Office of Inspector General (OIG) provides the following “Health Care Compliance Program Tips” at http://oig.hhs.gov/compliance/provider-compliance-training/files/Compliance101tips508.pdf:

The Seven Fundamental Elements of an Effective Compliance Program

1. Implementing written policies, procedures and standards of conduct.

2. Designating a compliance officer and compliance committee.

3. Conducting effective training and education.

4. Developing effective lines of communication.

5. Conducting internal monitoring and auditing.

6. Enforcing standards through well-publicized disciplinary guidelines.

7. Responding promptly to detected offenses and undertaking corrective action.

More information is available through the hyperlink to the OIG Compliance Program for Individual and Small Group Physician Practices, which is available in the “Resources” section of this article.

See the checklist of Do’s and Don’ts in the “Resources” section of this module as a guide to help you determine if fraud might be taking place in your office and to take step to prevent it from occurring.

If an unscrupulous staff member commits fraud against a government program like Medicaid, a dental practice with a compliance program in place will be better able to defend itself.

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