Collecting Payment Out of Network

How do you collect payment when you are out of network, and the company prohibits patients from assigning benefits to the practice?

What are the patient’s payment options?  Can the patient use HSA/FSA? 

The answer is that the patient can use HSA/FSA to pay the practice in full and then reimburse their HSA/FSA when the insurance reimbursement check is received.

According to the IRS website:  “If amounts were distributed during the year from an HSA because of a mistake of fact due to reasonable cause, the account beneficiary may repay the mistaken distribution no later than the due date of the tax return (not counting extensions) following the first year the account beneficiary knew or should have known the distribution was a mistake.”  

This rule covers the scenario where a patient charges 100% of the dental treatment fee to their HSA/FSA because the exact insurance reimbursement amount is unknown at the time of treatment, and the insurance company subsequently sends the patient a check for partial reimbursement.  The IRS has a form for this purpose.

It would be easier for the patient to put the full treatment amount on their credit card and subsequently get reimbursed to the extent allowed by the insurance company. 

There is another very good option.  According to CareCredit®, if the practice is out of network with the patient’s dental insurance carrier, the patient can charge the full amount of the fee to CareCredit®. When the patient receives partial reimbursement from the insurance company, the patient has the option of putting those funds toward early repayment of the CareCredit® balance.  

The patient is not obligated to use those funds to accelerate CareCredit®repayment, of course.  The patient only needs to pay off their CareCredit® balance within the prescribed interest free period to avoid interest charges.

By being aware of these payment options, practices can be best prepared when dealing with out-of-network insurance questions.

Dropping Insurance Plans: The Agony and the Ecstasy

There is an old joke among entrepreneurs: “I lose money on every transaction, but I make it up in volume.” There are times when this principle applies to dental insurance reimbursement.  The insurance companies are actually making it easier for dentists to decide to drop insurance plans because reimbursement rates are low, especially in light of cumulative double-digit inflation over the last two years, which makes the cost of delivering services higher than ever.  You can only discount fees so much before profits turn to losses.

In spite of these economic realities, however, there are other considerations.  I listen to many recorded calls to dental practices (with the appropriate HIPAA announcement that calls are recorded for training and quality assurance.)  The most common opening question from prospective patients is, “Do you accept the XYZ insurance plan?”  If the answer is “No, we are not in network with that plan,” the phone call often ends abruptly.  It’s an insurance hang up, in more ways than one.

If you want to get off of insurance plans, do the following:

  1. Build up your fee-for-service practice.  If you truly want to have a niche practice, focused on quality and not beholden to insurance companies, then you need to create that successful brand before you start culling the herd.   Two ways of accomplishing this goal are by offering a strong mix of profitable services and encouraging your uninsured patients to refer their family and friends.
  2. Start by eliminating the plan that affects that fewest patients and provides the least reimbursement.  Assess the impact on your practice before dropping other plans.
  3. Provide sufficient lead time for the transition.  I do not recommend sending a letter to large numbers of patients telling them that you no longer accept their plan.  Instead, inform patients verbally and in writing as they come in for appointments that at a time certain in the future, the change will be made.  As new patients call, of course, they should also receive this information.  
  4. Train the team.  Using the right verbal skills is essential.  You want to be clear and confident with patients, not apologetic.  You are making the change to maintain high standards, which in itself is a benefit to patients.

There is a certain amount of agony and soul searching that goes into the decision to drop insurance plans, but the payoff is sheer delight—the ecstasy of not having fees dictated by a third party.  Some dentists have handled the transition poorly and harmed their practices; but, when done, correctly, the decision is liberating.  Dentists who have been fee for service for several years would never go back to the old way of doing business.

One caveat:  The process is fraught with landmines.  If you would like to have a complimentary conversation with me about this topic, feel free to contact me.

David Schwab, Ph.D. is a practice management consultant, coach, mentor, and seminar speaker.  Contact: (407) 324-1333.

(This article first appeared in the Collier& Associates newsletter and is reproduced with permission.  I highly recommend this financial and business newsletter.  For more information, click here):