Claim denials can cost a dental practice tens to thousands of dollars in lost revenue each year. Half of the dental practices write off these dollars, and those who manage denials end up spending a lot of time and resources trying to recover the lost amount.
Result? Less staff productivity, increasing turnover, and less time for patient care.
All that badly affects your practice operations, patient experience, and cash flow consistency.
The best solution for that is to prevent claim denials in the first place by using reliable dental RCM solutions for practices. It boosts revenue growth by making payments fast, and saves your time unnecessarily spent on appeals and reworks.
Want to know how to reduce the claim denial rate? Let’s discover effective strategies to achieve that.
What is a Claim Denial Rate in Dental Billing?
While claim denials are something dental practices experience a lot, many are not familiar with the claim denial rate. It’s important to know what this metric is and how it works.
So, a claim denial rate helps calculate the percentage of dental insurance claims that are denied by insurance companies. You may calculate it monthly or annually.
It’s calculated by dividing the total number of denied claims by the total number of claims submitted in a month or a year, and then it’s multiplied by 100. The result is your claim denial rate.
If your claim denial rate is low, it indicates that claim reimbursements and collections are smooth.
But if your practice experiences a high claim denial rate, it means that you’re losing hard-earned money. In that case, you need to resubmit claims with appeals to recover revenue for denials and implement strategies to reduce the denial rate in the future.
Example: A dental practice submits 400 claims in a month and experiences 150 claim denials. When it multiplies the result by 100, the denial rate is 37.5% for that month.
It means that about 63% of the claims have been approved in the first attempt, counting for more than half of the claim submissions. It’s a good metric for an efficient revenue cycle, but it’s better to reduce it to 15-20%.
What is the Difference Between a Low and a High Claim Denial Rate?
The table below helps explain how a low and a high claim denial rate impact a dental practice’s finances and operations:
| Attribute | Low Denial Rate | High Denial Rate |
|---|---|---|
| Revenue cycle | Faster payments | Payment delays |
| Cash flow | Consistent and predictable | Irregular |
| Practice administration | Lower reworks on denials and better staff productivity | More time spent on reworks and appeals, staff burnout, and increasing staff turnover |
| Write-offs | Minimal revenue loss | Increased write-offs |
| Days in A/R | Lower | Higher |
| Financial health | Higher profitability | Revenue losses |
| Practice growth | Easy to scale | Growth slowed due to cash flow issues |
Now, just imagine how a high denial rate can make it difficult to run a practice.
The revenue cycle isn’t smooth, and practice staff expend their energy in recovering revenue from denials, while patients don’t receive the care they deserve.
To prevent these issues, track your claim denial rate regularly and start managing it from the very start to reduce this metric and eliminate billing errors.
How to Reduce Claim Denial Rate for Dental Practices?
Let’s discuss ways through which you can reduce the claim denial rate for a smooth revenue cycle management.
Automate Billing Process
Technology has evolved, and most dental practices are leveraging artificial intelligence (AI) to automate billing tasks, completing them in seconds and without errors.
You can benefit from that by deploying an all-in-one billing software, which performs most of your billing and practice management tasks, from entering patient data and taking digital imagery for X-rays to verifying patient coverage and scrubbing dental claims before submission.
The software also helps you check key RCM KPIs and performance metrics, like a claim denial rate, in real-time. It produces a dashboard, where you can view your claim denial rate, analyze your billing performance, and implement steps to improve the process.
Analyze Claim Denial Reasons
When you receive an explanation of benefits after a claim denial, it mentions the denial reason in the Remark Code section.
The Remark Code is a short alphanumeric code that helps check why the payer has denied a claim.
When you analyze most of the claim denial reasons, you automatically know the billing errors and begin fixing them, and also preventing them for future errors.
The most common reasons for claim denials are:
- Wrong CDT codes
- Incomplete documentation
- Misspelled patient name and address
- Incorrect provider’s NPI
- Outdated dental practice address
- Missing fields in the dental claim form
It helps you know all the patterns related to claim denials real fast, whether a payer is denying your insurance claims repeatedly, a particular front desk member is missing details in eligibility verification, or a biller is entering wrong CDT codes.
When you track claim denials, it’s easy to know the reason for the highest number of claim denials at your practice, and correct them for clean billing processes in the future.
Check Payer Policies for Dental Claims
Each insurance company has its own policies that dental practices must follow to submit claims. Whether it’s pre-authorization, documentation, or CDT coding rules, each dental payer defines its requirements.
So, before starting your billing process, make sure to check your payer policies and implement them in your revenue cycle management.
If you employ in-house billers, train your staff on payer policies. Also, update the latest policies in your billing software by integrating with the payer portal to fetch the latest details, or import the payer guidelines in file formats and upload them to the system.
The system automatically checks the payer policies and scrubs your claims against these rules before submission.
When you follow your payer policies in every dental claim submission, reimbursements are fast and complete, according to the contracted fee schedule.
Verify Patient Coverage and Benefits in Real-Time
The best approach is to proactively manage things to prevent claim denials, and the first step towards achieving the goal is to use real-time insurance eligibility verification services.
While many practices rely on verifying patient details before treatment, the best practice is to do so in real-time.
A patient’s coverage status and benefits may change between the time of the patient’s registration and the time of service.
So, you must verify patient details on each visit and check if the patient is eligible to receive a treatment.
When you verify details, you know what insurance covers and what a patient pays. With that approach, most dental claims are clean and likely to be approved on first submission.
Obtain Pre-Authorizations for Certain Procedures
Many dental practices experience claim denials because they don’t obtain prior authorization for certain procedures, such as bridges, crowns, dentures, and oral surgery treatments.
Dental payers require pre-authorization for these procedures, and if practices submit claims without requesting payer approval and including the obtained authorization number in the claim form, payers deny these claims.
So, make sure to follow your payer’s provider manuals, where they describe which procedures need pre-authorization. You can also verify the patient’s coverage and benefits to check the procedures for which payers demand pre-authorization.
Follow your payer’s pre-authorization requirements to submit claims that payers approve.
Fulfill Coding and Documentation Requirements
Dental payers require CDT coding accuracy for clean claims. Payers use these CDT codes to identify dental procedures.
The American Dental Association (ADA) publishes its CDT code changes each year, and insurance companies follow these updates to publish their new coding lists.
Make sure to use the right codes for each dental claim. Plus, attach all the required documents to each claim.
Payers require documents for expensive or high-risk procedures, like dental radiographs, intraoral photos, and narratives, to prove that a patient really needed the procedure to treat the dental condition.
The insurance companies approve dental claims after reviewing these documents and deeming them sufficient to prove the patient’s condition.
Example: A dental payer may request a pre-op dental X-ray for a tooth extraction, so the X-ray shows issues like bone loss, decay, and infection. Payer may also require a clinical narrative that mentions the patient’s condition, symptoms, diagnosis, and proposed treatment.
Scrub Claims Before Submission
Isn’t preventing claim denials better than reworking and sending appeals, which have their own deadlines, requirements, and processing times?
Automated claim scrubbing is the best solution for that, scanning claims and checking them to ensure they are correct and compliant with payer policies.
Scrubbing helps check if:
- CDT codes are correct
- All important fields are filled
- Complete documents are attached
- Pre-authorization is attached, if required
- Details like tooth surface and tooth number are provided
- Patient’s name, date of birth, and other details are correct with no typos
- Main policyholder’s insurance member ID is correct
- Provider’s NPI number and practice address are correct
It flags any errors before submission and rejects a claim, so dental billers can fix these issues. It saves the time required in managing claim denials afterwards.
Outsource Revenue Cycle Management
An effective way to reduce the claim denial rate is to outsource your practice’s dental RCM to a reliable partner, like TransDental.
RCM outsourcing companies manage your entire dental revenue cycle, ensuring that your claims are clean and compliant with payer policies.
They handle all the tasks, right from the patient’s registration at your practice to the final claim reimbursement.
Whether it’s mastering payer rules or automating RCM steps, these companies are experts at it all.
Working for decades and knowing each insurance company inside out helps these billing experts reduce your claim denial rate with ease.
And the cost of outsourcing RCM is much less than paying in-house RCM specialists for the task.
They charge just a minimal percentage of your collections and help you recover revenue with high profitability.
Return on investment (ROI) is guaranteed when you partner with reliable companies to outsource RCM services.
Final Thoughts
Claim denial rate is a key metric in dental revenue cycle management, which should be tracked and reduced. Monitoring this metric helps you identify denial reasons, check billing errors, and implement the relevant fixes for each issue.
Prevention is better than managing a denial afterwards. So, verify a patient’s coverage and benefits in real-time, follow payer policies for coding and documentation, scrub each claim before submission, and automate billing for efficiency. All that helps you reduce claim denial rate and get paid right for the hard work and expertise you put into restoring every smile.
Frequently Asked Questions (FAQs)
What’s the difference between a denied claim and a rejected claim?
A rejected claim is returned before processing, usually due to a technical error like a missing field or wrong payer ID. Contrarily, a denied claim is submitted but not reimbursed by the payer. Rejections are easier to fix quickly, while denials often require appeals with documentation.
How long do I have to appeal a denied dental insurance claim?
Timelines vary by payer, but most give 30–180 days from the denial date. Missing the appeal window usually means the money is gone. Always check payer-specific guidelines and build a tickler system to track appeal deadlines.
Can outsourcing dental billing actually reduce my claim denial rate?
If you outsource your billing to TransDental, it helps you reduce the claim denial rate. Billers are trained on all RCM aspects like dental coding, payer rules, and denial management. They catch errors before submission and have proven appeal processes, for which in-house staff can’t easily find the time.
How often should I review my denial data?
High-volume practices benefit from real-time reviews. The goal is to spot patterns early, like a payer denying a specific code, a documentation gap, a front-desk step being skipped, before they become a larger revenue leak.
