Dental practice write-offs are a critical piece to your business finances. And write-offs are complex; it’s about finding the right balance for your practice and market.
Sound dental practice management means having insight into your write-offs and ensuring you have the correct ratio. Unfortunately, many practices don’t understand their write-off percentages and often record them incorrectly. This leads to inaccurate financial reporting, making it difficult to know how your business is performing.
We’ll walk you through what you should focus on for dental insurance claim write-offs, common mistakes and issues, and the ideal write-off percentage for your practice. We’ll also talk through tactics for renegotiating your insurance contracts so you can create a beneficial relationship for your practice.
What You Should Focus on for Dental Practice Write-Offs
You’ll want to pull billing and case reports from your practice management system to gain insight into your dental insurance claim write-off percentages.
And we know a ton of reports are available to you, which can be overwhelming. So the simplest place to begin is with a report on your typical gross charges. If input correctly, you’ll see your adjustments from the gross amount and then you can calculate your write-off percentage.
We’ll dive into this later, but dental practice write-offs in North Carolina should be around 10%. If you’re nearing a dental insurance claim write-off percentage of 30%, you’ll want to take a deeper look into your billing practices. And you may need a dental practice management consultant to work alongside you, determine who is paying the least, and develop a plan to lower the write-off percentage.
Sometimes a practice may show very few or no write-offs. This means you’re pulling an incorrect report and looking at the wrong data. Partnering with a dental CPA can prevent such mistakes.
Common Issues with Dental Patient Write-Offs
Most practices want patients to see how much their procedure costs and the rate they pay with their insurance. In addition, it helps them understand the value of the coverage and the cost of dental care.
You may load a fee schedule into your practice management system to show these costs. But adding insurance fees along with your standard rates can cause issues for accounting.
Here’s an example of a common dental practice write-off mistake and how to prevent it.
Let’s say you bill $300 for a procedure, but the patient only pays $200 because of their insurance plan.
The result is a 30% write-off. If this is keyed incorrectly, you may only see the $200 charge and no write-off when you pull your reporting. Now, you’re facing a potentially inaccurate picture of your write-offs and billing.
We record gross charges and adjustments when offering dental practice management consulting services. Then, we have net charges and receipts to see exactly how busy your practice is and what you’re billing.
This information is compelling because it can show where your practice needs to improve so you can grow.
Negotiating Insurance Rates
Once you better understand your billing and dental patient write-offs, you may wonder if it’s time to renegotiate your contracts with insurance carriers.
The short answer is, “yes!”
It’s always possible to revisit a contract and negotiate more advantageous terms. Renegotiation is easier when you operate a busy practice in a large market because you’re a high-volume source for insurance companies.
If you want to begin negotiation, start with carriers who reimburse the least amount and pay the lowest. Then, work your way through the other carriers. Before reaching out, ensure you have copies of your contracts and know the language around reimbursement rates.
Most contracts are written in a way that is advantageous for insurance carriers. So, you’ll want to understand your current agreement clearly. It’s not uncommon for attorneys specializing in dental contracts to get involved due to the complicated nature of this process.
The Ideal Dental Insurance Claim Write-Off Percentage
Statistically, 12% is the dental patient write-off sweet spot. It may be a little more or less, depending on your market.
In urban areas, dental insurance claim write-offs are competitive because providers and employers work with whoever is accepting the plan, giving you little room to negotiate.
Rural areas with just one large employer face a similar problem. Insurance companies and employers have a lot of power in these areas, limiting your ability to work with them or leverage favorable terms.
If you work in a region with few large employers, you’ll have a better opportunity to negotiate rates and have lower dental practice write-offs.
How The Dental CFO Can Help
When running your practice, you don’t have much time to look through dental patient write-offs, review contracts, or change your billing structure. And it could be costing your business more than you realize.
Working with The Dental CFO team, you’ll have access to financial experts and dental CPAs who can dive deep into your reporting, look for issues, and create a plan to minimize your dental insurance claim write-offs.
And honestly, this is not an overnight process. It can take years to find unfavorable payors and eliminate those plans or renegotiate rates.
Our team will work alongside you, taking the burden off your plate, and help you create a strategy to improve your dental practice’s financial picture.
Getting started is easy. Reach out to us and you can have a conversation with your new CFO today.