Dental practices offer discounts for a variety of reasons. Sometimes discounts are given at the request of the patient because there is an extenuating circumstance. Other times discounts are offered to entice new patients to join the practice or to encourage patients to accept a treatment plan. Dentists may also offer discounts to family, friends, or staff members as a goodwill gesture.
While providing a discount may seem like an innocent and well-intentioned offer, there are rules, regulations, contractual obligations, and/or laws that must be followed. The American Dental Association (ADA) suggests that dental claims should always accurately report the fee the practice will accept as payment in full for the service
There are two ways to report the discounted fee paid by the patient. The first option is to report the full practice fee on the claim form and in the remarks section state, “The fee shown was discounted by 50 percent.” However, the reality is that many claims are auto adjudicated and are not examined by an actual person. So, the payer may overlook the remark and pay the benefit based on the full, submitted fee. If this occurs, the practice is obligated to refund the excess reimbursement to the payer. The second and best option is to report the discounted fee that is actually charged for the procedure. By reporting the actual discounted fee, there will not be an overpayment from the payer. Thus, there is less risk to the practice.
The practice should always report the actual fee assessed on all dental claims, regardless of whether or not it participates with the patient’s dental plan. The fee noted on the claim form should reflect the fee for the service, taking into consideration any discounts, coupons, courtesies, and any other fee reductions the practice offers. This does not mean that a contracted fee should be reported on a claim. If the dentist participates with the patient’s plan and has a contractual agreement with the payer to accept the contracted fee as payment in full for the service provided, the fee listed on the claim form should still be the full practice fee, even if the contracted fee is lower.
All PPO contracts mandate that their covered patients be treated and charged the same as all other patients. Therefore, a contract may require that its covered patients receive the same discounted rate as any other non- covered patient. Requiring that the true fee for service be reported for all patients (including patients covered by “regular” plans, PPOs, or without coverage) ensures that PPO patients are treated the same as all non-PPO
Most dental contracts, including state and federally regulated plans, require that deductibles and copayments be collected from the patient. It is considered fraudulent to write off any portion of the patient’s copayment and/or deductible without disclosing the discount(s) to the payer. This is referred to as copay forgiveness and is illegal in every state and federal program and is prohibited by all PPO contracts. Typically, the discount must be applied to the full fee and not to the patient’s copayment and/or deductible. Therefore, the payer receives the benefit of any discounts made for the service provided.
Payers are aware that many practices do not disclose discounts that are provided to family and friends and often do not collect copayments and/or deductibles from them. Because of this widespread abuse, payers have taken action to restrict payment to providers for covered services provided to immediate family members.
Dealing with Discounts
Dental claims are typically auto adjudicated; however, paper claims and/or claims submitted with electronic attachments are generally reviewed by the payer and are not auto adjudicated. So, the disclosure of discounts should be submitted on a paper claim or as part of an electronic attachment to call attention to the discount. This alerts the payer of the discount so that the claim may be manually reviewed (not auto adjudicated) and the appropriate action taken.
The payer may take one of three possible actions:
1. Deny the claim outright.
2. Decrease the reimbursement, accordingly.
3. Pay the claim without any adjustment and/or action.
Alerting the payer of a discounted rate could raise a red flag, making the practice vulnerable to a potential insurance audit. The practice should always consult a healthcare attorney before waiving any portion of a copayment and/or deductible and before routinely providing discounts or courtesies to patients. Often, there are stringent rules that prohibit discounts.
Let us now review a few examples of how discounts may be provided and reported.
The Out-of-Network Provider
A patient covered by XYZ Insurance presents in need of a crown. The doctor does not participate with the patient’s insurance. The practice’s crown fee is $1,000 and is within the payer’s allowable fee for the crown. The crown is covered at 50 percent and there is a $50 patient deductible for major services. The patient is a reliable, long-term patient who always pays on time and never misses appointments. So, the dentist offers a five percent courtesy discount to the patient and agrees to accept $950 as payment in full.
The practice collects the $50 deductible. A claim is filed with the patient’s insurance, and the discounted fee of $950 is reported on the claim. The payer will provide a reimbursement of $425 (half of the crown fee, less the $50 patient deductible)
$950 discounted fee x 50% coverage = $475
$475 – $50 patient deductible = $425 insurance reimbursement
The In-Network Provider
A patient covered by ABC Insurance, a PPO plan, presents in need of a crown. The doctor participates with this PPO plan. The practice’s crown fee is $1,000; the contracted PPO fee is $800. The crown is covered at 50 percent of the PPO fee and there is a $50 deductible for major services. The practice has a promotion in place, which offers a 15 percent discount on all crowns. Thus, the practice’s promotional rate on crowns is $850. The patient wants to take advantage of this promotion.
The practice reports its promotional (discounted) fee of $850 for the crown on the claim form. The practice has agreed, via the participation agreement, to accept the contracted rate of $800 as payment in full. Therefore, the patient receives a better deal as a member of the PPO. The PPO write-off is $50, after the $150 discount is taken.
The payer provides reimbursement for $350 and the patient’s portion is $450.
$800 PPO fee x 50% coverage = $400
$400 payer responsibility – $50 deductible = $350
$400 patient responsibility + $50 deductible = $450
When providing discounts remember:
• The claim should always report the actual discounted fee when discounts are given, not the practice’s full, non-discounted fee. The discounted fee is the fee actually paid by the patient.
• All patients must be treated equally when providing discounts. That is, both insured and noninsured patients should be offered the same discounted fee.
• Discounts or courtesies are to be taken off the full fee, not selectively applied to the patient’s portion (as forgiveness of the copayment and/or deductibles). Both the payer and the patient should benefit from the discount.
Finally, a strong word of warning: Always consult a healthcare attorney before routinely waiving any portion of the copayment and/or deductible and providing discounts to patients. When discounts are offered, be sure that they are handled properly, to do otherwise could jeopardize the doctor and the practice.
Note: This article does not provide legal guidance for offering discounts. Furthermore, any changes to the facts and circumstances of the scenarios provided could change the outcome. Always seek the advice of a healthcare attorney for your specific scenario.