Trim the Write-Off: Yesterday’s Tools Need Updating — And the Axe Needs Sharpening

Dental Insurance Today — March 2017

Dentist with axe

…Now let’s pick up where we left off…

One of my most memorable law enforcement instructors with Treasury taught us that the “ultimate tool of the crime fighter” was not the sidearm, vehicle, personal communication device or partner – but was, in fact, the lowly pencil.

The same can be said for the professional firefighter and their reliance on the symbolic Collins Tool Seagrave “pick head” axe. As the firefighter must successfully control ventilation, so must the crime fighter control, as well as manage, the flow of documented information. Your dental practice is no different. Control and manage the ventilation, and you conquer the fire. Understand the significance of your practice numbers, and you conquer your market share.

Computers and the data they maintain can be your best friend, as well as your worst enemy. The old saying of “garbage in equals garbage out” is very true when it comes to your dental practice management software. If you and your administrative team are constantly adjusting dollar amounts to satisfy the accounting of participatory benefit plans, your software is not working for you — you are working for it.

This is not good.

Your software must be able to track multiple participatory fee schedules and the agreed upon maximum allowable charges. Of utmost importance is the confirmation that your computer submits the right dollar amount to the right plan at the right time.

– Right Amount

Does the benefit plan want you to submit the patient’s claim with your usual unrestricted fee or some variation of a participatory reduced dollar amount? Since most all participatory benefit plans want you to submit your full usual fee, do you have to individually adjust the patient’s account, or does your system automatically account for the discrepancy between your usual fee and its maximum allowable? Most all of the major dental practice management software programs have the ability to generate the claim at your full usual fee while accurately accounting for only the participatory maximum. If you have to individually adjust these amounts, you probably need to correct your software.

– Right Plan

Does your automated practice management system know which plan is assigned to which patient? Remember, plan specifics are most often based on indexing the employer and not necessarily an insurance company. An individual employer may very well have several different benefit plans for its employees. On the same note, individual insurance companies have thousands of different employer customized variations of their parameters of payment. The individual patient record needs to be assigned an individual benefit plan.

Don’t fall into the trap of incorrectly indexing and/or linking individual patient records by “family” or multiple patients to an individual “responsible party.” This is most often the cause of incorrect secondary claims with overpayments. And no, you can’t apply Dad’s overpayment to Mom’s out-of-pocket obligation.

– Right Time

Does your automated practice management system know when to generate the claim? Can you submit the claim for the crown on the date of preparation or do you have to wait until cementation? This is a plan-specific issue and has nothing to do with the terminology on the ADA Claim Form. Many offices have found out the hard way why, for years, I have stood my ground in teaching to never, ever submit a claim for benefits until the procedures are actually and totally completed. The sooner the patient participates in the cost of care, the better.

But Sometimes the Numbers Just Don’t Add Up

We are all in the hot and heavies of having to participate on both sides with this continual, as well as political, healthcare conundrum. Who should we believe, and are they telling us the truth? Is the economy of healthcare strong and stable with both fee and patient growth, or are we on the brink of yet another major market correction? Truth be told — statistics can only lie when liars use statistics. So is the case with the term “write-off.”

Academically, and from an income tax accounting perspective, a write-off is identified as an uncollectible debt. With your current “cash” (as opposed to accrual) system of accounting, when a patient pays you and your office $100, that amount is considered income and is taxable. In the unforeseen event of a problem with the previously collected payment (bounced check, etc.) it may be later identified as a write-off. In other words, you had it posted as taxable income but later it was lost.

With the current political, as well as Wall Street redefinition of terms, let’s revisit some basics of financial accountability. Is your practice management software working for or against you? Are you getting at least basic information to make sound business decisions or is your computer nothing more than a glorified pegboard?

My point is this. Have you ever heard your contemporaries make one of the following statements?

“If we were not a participating provider for ABC Dental Plan, we would not have had to write off all those crown buildups.”

 

“Our office lost $ because we participate with ABC Dental Plan.”

 

“Look at all the money you are losing by participating with ABC Dental Plan. Those write-offs should be going into your pocket, not the insurance company’s.”

In the past, the term write-off has most often inaccurately been associated with that which occurs when your usual fee in the open, unrestricted marketplace is $1200, and the plan’s maximum under a participatory contract is only $865. Did you lose $335 doing the procedure or did you never have it in the first place? A write-off is that which you intended to collect but were unable to do so. You did not, and cannot, lose that which you never had. My point being — do not rely solely on the total dollar amount of financial adjustment to determine the stability and profitability of your plan participation.

My intent here is to never be judgmental as concerns participation with dental managed care plans. It’s no different from the various forms of Medicaid. Take out the emotion and deal with the reality of hard numbers. Let me go on record as saying, “Never join or participate in any reduced fee managed-care plan unless you need patients to fill empty chairs.” Why in the world would you do a crown today for a total of $865 and make a full fee $1200 patient wait until next week for an appointment?

The write-off is a phantom number that does not exist. It’s not production as it never was and never will be. It’s not a potential bank deposit and it never was. Some consider it to be a cost of doing business but if so where is its return on investment? When you go back and consider why the patient is sitting in your operatory chair you have to equate the overall long-term value and its associated costs with and of that patient. Treat that write-off number for what it is — a discount to fill an empty chair.

Remember, you need to understand your practice numbers. Know what is flowing in versus what is going out and, most important, think about what is right for the patient.

Celebrate Your Day!

National Dentist’s Day is March 6, 2017! And in honor of those of you who have read thus far, please download this complimentary ebook copy of Chapter 1 from the updated text Fee For Service Dentistry With A Managed Care Component. In it you will find the original 1970 Scientific American article by Sidney Garfield, MD. Sharpen your pencil and axe while enjoying a glimpse into both the future and recent past of what dentistry is facing. Download Fee For Service.

Tom Limoli

Tom Limoli

“The Nation’s Leading Reimbursement Expert”

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