Presenting Financial Agreements

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Presenting Financial Agreements
Would you ever buy a dress without seeing the price tag? Would you ever repair a car without an estimate? Why is it that we force our patient’s to proceed with dental treatment without clearly reviewing the treatment plan proposal and the financial responsibility that goes along with it. Transparency builds trust while lack of it promotes distrust. Many practices feel that they want to bill the insurance and then bill the patient for the copay. That creates uncertainty and problems on many levels. First of all, the patient may not be in a position to pay their portion, therfore you will not get paid. No one likes to work for free, right? If you proceed with treatment that a patient can not pay you for, you just did it for free and on the house. This is one of the reasons the accounts receivable is usually high. Second, the patient had the right to refuse treatment to prevent a financial burden, and now they were forced into financial distress. This situation burns bridges, creates animosity, and dissatisfaction with dental treatment. How many times you call to collect on an account and the patient says they can’t pay you and “by the way the crown never felt right anyway!” It really is not fair for the patient not to know what they will owe for the procedure.
Why not take a few extra minutes during treatment planning and put together a sound financial agreement for the treatment. Let the patient make an informed buying decision. You do not want to schedule people that can not pay for the treatment, you do not want to schedule patients that would not want to be scheduled. How do you know they would not want to be scheduled? Well, after you present all the details, the patient may decide that they can not proceed. You can then schedule another patient in that time slot that will pay for the treatment rendered, the practice can make money, your AR does not increase, statements will not be generated, patient will be happy, and you did the right thing.
There are many philosophies about how to draft it, present it, and what should be included in a financial agreement (FA). Here are the important components that must be included:

  1. total price for the procedure before any provider discounts or write offs:

    1. the reason is that if isurance allows you to collect your full fee then your full fee is stated on the FA

    2. if you are a provider it shows the patient how much they DO NOT have to pay you and what a deal they are getting

  2. estimated copay-amount you are asking patient to pay to start the procedure which will be collected at time of service. We take huge efforts to explain to patients that this is an amount based on previous insurance payments however it changes frequently without our knowledge. Therefore, we use the estimated copay as an amount we collect to proceed with treatment but the patient may have to pay more or get a refund if they overpaid. We will resolve the balance after the claim resolves. We also tell the patient that this is the amount their insurance decided the patient owes us.

  3. Payment due at time of service: statement on the FA that tells the patient that the amount is due when procedure is started

  4. Discount given if pre-pay copay when patient schedules the appointment. We give 5% discount for cash and check prepays and 3% for CareCredit or credit cards pre-payments

  5. Total treatment plan amount: the FA should have the total for the whole treatment needed NOT just the next visit treatment. We want to tell the patient about all the work they need to encourage pre-pays and hopefully gain acceptance for the total treatment plan. We encourage patients to be scheduled for quadrant dentistry so the treatment needs to be treatemnt planned and presented by quadrants.

  6. Disclaimer about insurance: This statement tells the patient that in the event insurance decides not to pay for the treatment as anticipated, the patient will owe up to the total amount of the treatment price.

  7. Disclaimer if insurance check goes to patient: This statement tells the patient that if the insurance check goes to patient we normally would collect the total fee at time of service. Hoever, the practice will give them a grace period of 30 days to bring in the insurnace hceck. If the insurance does not send the check and patient does not bring it in, the patient will be billed and will owe the total amount within 10 days of received statement. (some practices do not like to give this grace period)

How do we come up with a figure that we can collect at time of service.

So why is it not common place to present sound financials? It is the uncertainty of the insurnace plan benefit. You see, the only thing we know for sure is the contracted price if you are a provider. And even the known fee schedules are often not utilized by providers in their treatment planning. I know it is cumbersome and demands manpower but for goodness sake, ENTER your fee schedules into your practice management software and asign the schedules to Employers and your patients. It will give you a good start.

The next step is to obtain specific plans through daily benefits verification process. Each dental insurance company has a fee schedule but it offers various plans to Employers. So some plans have downgrading of procedures, frequency limitation, non covered benefit for codes, and other plan clauses. If you don’t ask those questions you will mislead the patients to count on benefit coverage and your estimate will be wrong.

Don’t get me wrong, we do not want to be an expert in insurance. In fact, that is impossible and offices that try to quote exact estimates place a lot of efforts in the wrong area. The focus should still be on value and patient education of medical necessity via intra oral pictures, videos, and printed educational material.

The point is to draft an agreement that is in the ballpark of what you need to collect at time of service to proceed. This is different than to quote the insurance coverage. I want to teach you to shift your patient’s paradigm to understand that you require a certain amount (a downpayment) to proceed which is fairly close to wha they would actually owe for that procedure, but because we don’t know exactly what insurance covers, we will take a downpayment to start and resolve the balance after the insurance claim resolves.

Based on the fee schedules and the benefits verification you can come up with a figure that translates to an amount that the insurance most likely will pay and the downpayment that you require to start treatment because it is medically necessary and can not wait. It is a signed agreement and it states that there might be a remaining balance after insurance resolves. Without this financial agreement, if you do not collect at time of service something to proceed with treatment, your cashflow will always be lagging behind, your collections, will always be high, you will end up in battles with your patients, and create many resentful relationships, not to mention that your team will hate their collection job. It is always harder to collect after the procedure was performed than before you touch the tooth. An we al know that ethically we need to finish the procedure regardless if the paitnet paid off their balance.

So….work on the following

  1. put all fee schedules in

  2. Verify benefits and get plan breakdown enter it in the computer

  3. Attach the employers and patients to the plans and fee schedules

  4. Enter all treatment plans in the computer and group clinically in sequence of appointments

  5. Draft a financial agreement reflecting:

    1. Total patient responsibility for the total plan

    2. Break it down into appointments and patients responsibility for each visit to proceed and be collected at time of service

    3. Give 3-5% discount for paying their downpayment in full for the total treatment plan at time of scheduling

  6. Communication about the financial agreement: we are presenting to you what we will require to collect at time of service to proceed with treatment. The amount is based on information we have about your plan but insurance changes all the time and we can not keep up with this information. We will resolve the balance after the insurance claim resolves and you might have a credit or a balance due. We will call you to after the claim resolves. The reasonw e tell them we will calll them is because if there is a small amount to be paid you can just call them an get a credit card over the phone to settle the bill and avoid sending a statement. You can say “I received your insurance check today and the claim has resolved leaving you a credit or leaving you with a balance of $14 can we settle that over the phone with a credit card.

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