Pros vs. Cons of Using Insurance Fees | How to run a dental practice

Should you use the insurance allowable fees in your Dentrix system?

This is an important question each dental office needs to decide – here are the advantages and disadvantages of each approach. I believe the people that should make this decision include:

  • Dentist(s) in the group
  • Insurance/billing person
  • Office Manager

These are the people who will be most affected by the setup, so they need to understand the implications.

Scales of Justice


Benefits of Using the Insurance Allowable Fees

#1 – See a more realistic production number on the schedule

When you use the insurance allowable fees, your production number is more accurate. It’s not perfect because there will always be some professional courtesy discounts or senior citizens discounts applied as patients check out, but it’s much closer to reality. For practices that accept several plans or only accept a couple but have a large percentage of their patients in those plans, this makes a big difference. If the average PPO fee is 30% less than the standard fee, this is the amount of error you can eliminate by using insurance allowable fees. Its the difference between believing you have a $200,000 production number and really having a $140,000 production.

For Medicaid offices or practices where almost all their patients are under PPO contract, the difference could be more like 60%! That could mean seeing a $200,000 production vs. an $80,000 production. If you are the dentist owner of a group practice – do you want your associates to see a false $200,000 production number and then wonder why they aren’t making more money?

#2 – Save some time in entering adjustments

When you set up your insurance allowable fees, hopefully this saves your insurance/billing person some time entering manual adjustments. It won’t be perfect, but the idea is that it will save her from entering two separate manual adjustments on every patient that comes in for a cleaning and exam. One adjustment for the hygienist and one adjustment for the dentist. Our billing/insurance staff are generally highly paid – and often behind on following up with insurance and collections. Would you rather have this team member spend time on collecting from insurance and patients – or entering adjustments?

Realistically, she will need to keep an extra eye on the EOBs so that if an insurance pays more than the fee charged out in the ledger, she creates a debit adjustment – and then calls the patient to explain. Again, its not perfect, but if we follow the 80/20 rule – how many patients come in each day for cleanings that you could save this time on vs. how many unusual codes end up with a different payment amount?

#3 – Hygienists see a more realistic production number

Speaking of highly paid staff, hygienists are encouraged to achieve a per day production goal in most offices. If you use insurance allowable fees, they can more easily see an accurate production number. Again if the difference is about 30%, do you want your hygienist to see that she did $1000/day (hit her goal) or $700/day (the reality).

#4 – Dentists see the comparison between standard and allowable fees on treatment plans

I believe this is the best reason to use insurance allowable fees in your dental software program. When you set up your Dentrix treatment plans to show both the column for standard fees and the column for allowable fees – the dentist can SEE THE DIFFERENCE. When the dentist can see the 30% or more reduction in fees on an individual patient’s treatment plan, this drives home the impact of joining PPO plans.

As soon as you use standard fees for all patients, the dentists immediately lose the ability to craft a treatment plan that is financially successful for the practice. If the real fees are hidden, the dentist will never know how big a difference exists on specific procedures. What you don’t know, can hurt you.

#5 – Treatment Coordinators can show patients the discount due to allowable fees

For staff responsible to handle financial consults with patients who have large treatment plans, showing this same difference between the standard fee and the allowable fee is helpful in establishing financial arrangements. Immediately, the patient can see that they are ALREADY RECEIVING a discount simply by the fact that their dentist is a member of their dental insurance plan. A sharp treatment coordinator will point this out – and it helps reduce the patient’s request for extra discounts or negotiation on fees.

#6 – It’s faster to provide patients with their amount due

When you use the insurance allowable fees in your treatment plans, your front desk team members can easily ask the patient to pay their portion because it is automatically calculated for them. This speeds up the check out process and eliminates patients waiting at the front desk. If you have joined a PPO plan but do not enter the insurance allowable fees, then your front desk team member is stuck using a calculator for each procedure to try to give the patient a reasonable estimate of what they will owe! Imagine a treatment plan that has 6 different procedures, a few covered at 80%, others covered at 50%, maybe even one procedure will be covered at 100%? How long will it take for your front desk staff to calculate maybe a 30% reduction in fees and then an 80% coverage – procedure by procedure by procedure?

The longer it takes a patient to get the financial information they need – and the more your team needs to work with a calculator to get the numbers, the less impressed your patient is with the practice. They just want to know how much it’s going to cost so they can put it on their credit card and get going! This also can be frustrating for your administrative staff who feel they don’t have the right training/support to do their jobs successfully.


Negatives of Using the Insurance Allowable Fees

#1 – You will have some debit adjustments which are confusing to patients

This is the biggest challenge of using insurance allowable fees. There will be the occasion when the insurance company will pay more on a procedure than you charged out in their ledger. When this happens, you have to enter a debit adjustment to increase the fee on the ledger to match the EOB. This is confusing to patients and they can become upset.

To mitigate this situation, on any fee that you are unsure about (or you don’t know what the insurance allowable fee is) then just use your standard fee as your insurance allowable fee. Then, when the insurance company pays you will enter the adjustment. There will be situations where a new employer offers a richer plan and you will have to use the debit adjustment to make the patient ledger correct. When that happens, call the patient and explain that you are using the EOB as your guide – you will increase or decrease your computer fees to match the insurance EOB.

In my experience, I have talked with upset patients who wondered if they were being charged extra through these debit adjustments – and handling them is very simple. You just print the EOB and show the patient how you are using the fees on the EOB exactly. If the patient understands math and can see how when you add the too-low fee in the ledger plus the debit adjustment it matches the insurance allowable fee on the EOB – then they are comfortable with their account. I have had a few patients that still felt suspicious of this adjustment even after I explained it – and I believe this level of math was just too much for them. So, be aware of this downfall.

#2 – You will have to update fee schedules or watch for higher insurance fees

When you enter insurance payments, you need to keep an eye out for an insurance plan that pays higher than the allowable fee you’re using in your Dentrix software. Then, you can update that as the new allowable fee in Dentrix. Only takes a second to do – but if you do not use the insurance allowable fees, you won’t have to bother.

#3 – It’s more challenging to understand the ledger

Training new staff to read the ledger can be a challenge. It could be difficult for a front desk team member to remember that the setup of the Dentrix software sends the full fee on the claim and the allowable fee into the ledger. Plus, it can be confusing for staff to explain debit adjustments to patients. If you don’t want to educate your team, then by using only standard fees they can see things a bit easier.


So – which way makes more sense for your practice?

If you decided you want to use the insurance allowable fees in your Dentrix software, then you may be interested in a set of instructions to guide you. It also includes instructions to set up your treatment plans so you can see the two different fees in Dentrix:

Check out How to Set Up Dental Insurance Plans


Handing insurance fees effectively is just one way to run a successful dental practice. If you’re interested in new ideas on running a dental practice, please subscribe to my weekly blog. One of the biggest challenges to managing a dental practice is managing dental insurance. With dental insurance handled, then dental marketing for new patients becomes a primary focus. In today’s day of online reviews, handling patient complaints well is essential. As your practice grows, hiring dental staff becomes more important. With 18+ years of dental practice management experience, I’m open to your questions to help you run a successful dental office.

AUTHOR: Jill Nesbitt
  • Jerri

    Hi Jill,

    In #3 of the “Negatives of Using Insurance Allowable Fees” you mention It could be difficult for a front desk team member to remember that the setup of the Dentrix software sends the full fee on the claim and the allowable fee into the ledger. I noticed that yes, our full fee is on the claim, but the that same fee is also on the ledger, not the “allowable fee” can you tell me why the allowable fee doesn’t show up on the ledger?

    Thank you

    August 14, 2015