The Essential Guide to Dental Billing Terminology: Your Complete Resource

Understanding dental billing terminology is fundamental to running a successful dental practice. Whether you’re a new office manager, front desk coordinator, billing specialist, or dentist looking to better understand the financial side of your practice, mastering this specialized dental billing and coding vocabulary is essential for accurate claim submission, effective patient communication, and optimal revenue cycle management. 

This comprehensive guide breaks down the complex world of dental billing terminology into clear, practical explanations you can reference daily. We’ve organized terms alphabetically within categories for easy navigation, with real-world examples to illustrate how each term applies to your practice operations.

General Dental Billing Terms

Account Balance

The total amount owed by a patient, including charges from insurance and patient responsibility portions. This includes deductibles, co-payments, co-insurance, and any non-covered services.

Example: If a patient’s treatment cost $1,000, insurance paid $700, and the patient made a $200 payment, the account balance would be $100.

Accounts Receivable (A/R)

The total amount of money owed to your practice by patients and insurance companies for services already rendered. This is a critical metric for measuring practice financial health.

Best practice: Monitor A/R aging reports regularly, with goals of collecting 95% or more of collectible balances within 90 days.

Adjustment

A change to a patient’s account balance that increases or decreases the amount owed without being a payment or charge. Adjustments can be positive (adding to balance) or negative (reducing balance).

Common adjustment types

• Contractual adjustments: Write-offs for network participation agreements
• Courtesy adjustments: Practice goodwill reductions
• Insurance adjustments: Difference between billed and allowed amounts
• Error corrections: Fixing posting mistakes

Example: Your practice bills $150 for a filling. The insurance allowed amount is $120. You’d post a $30 contractual adjustment, write off the difference, and never collect it from the patient.

Aging Report

A financial report categorizing outstanding accounts receivable by how long balances have been unpaid, typically in 30-day increments: current (0-30 days), 31-60 days, 61-90 days, 91-120 days, and over 120 days.

Industry benchmarks

• 0-30 days: 65-75% of total A/R
• 31-60 days: 15-20% of total A/R
• 61-90 days: 5-10% of total A/R
• Over 90 days: Less than 5-10% of total A/R

Assignment of Benefits (AOB)

A written authorization from the patient directing the insurance company to pay benefits directly to the dental practice rather than to the patient. Most practices require patients to sign AOB forms.

Why it matters: Without AOB, insurance companies send payment checks directly to patients, creating collection challenges and cash flow issues for your practice or dental billing services provider.

Bad Debt

Account balances that are deemed uncollectible after exhausting reasonable collection efforts. These are typically written off as losses.

Common causes:

• Patient financial hardship
• Patient moved without forwarding address
• Patient disputes and refuses to pay
• Small balance not worth collection costs
• Bankruptcy or death of responsible party

Best practice: Have clear bad debt policies defining when accounts are written off (typically after 120-180 days and multiple collection attempts).

Dental Insurance Coverage and Payment Terms

Annual Maximum

The maximum dollar amount an insurance plan will pay toward dental care for an individual patient during a single benefit year (usually calendar year or plan year). This is one of the most important concepts for patients to understand.

Typical ranges: $1,000 to $2,000 per person annually, though some plans offer $2,500 or higher.

Patient education tip: “Your insurance covers up to $1,500 per year. You’ve used $800 so far, leaving $700 available for the rest of the year. These benefits don’t roll over, so unused amounts are lost at year-end.”

Benefit Year

The 12-month period during which insurance benefits, deductibles, and maximums apply. This can be a calendar year (January 1 – December 31) or a plan year starting on another date (e.g., July 1 – June 30).

Why it matters: Understanding benefit years is critical for:

• Helping patients maximize benefits before expiration
• Explaining deductible resets
• Strategic treatment planning across benefit years

Birthday Rule

A method for determining which parent’s insurance is primary when a child is covered under both parents’ dental plans. The parent whose birthday (month and day, not year) falls earlier in the calendar year has the primary insurance.

Example: Mother’s birthday is May 15, father’s birthday is October 3. Mother’s insurance is primary for the child, regardless of whose plan has better coverage.

Exception: Some divorce decrees or court orders override the birthday rule with specific instructions about insurance priority.

Co-Insurance

The percentage of the allowed amount that the patient is responsible for paying after the deductible is met. This is expressed as a percentage split between insurance and patient.

Common co-insurance structures

• Preventive care: 100/0 (insurance pays 100%, patient pays 0%)
• Basic procedures: 80/20 (insurance pays 80%, patient pays 20%)
• Major procedures: 50/50 (insurance pays 50%, patient pays 50%)
• Orthodontics: 50/50 (insurance pays 50%, patient pays 50%)

Calculation example: Treatment cost: $1,000 Allowed amount: $800 Deductible already met: Yes Co-insurance: 80/20 Insurance payment: $800 × 80% = $640 Patient co-insurance: $800 × 20% = $160 Contractual adjustment: $200 (difference between billed and allowed)

Co-Payment (Co-Pay)

A fixed dollar amount the patient pays for specific services, regardless of the actual cost. Co-pays are less common in dental insurance than in medical insurance.

Example: A plan might require a $20 co-pay for each office visit, or a $50 co-pay for each crown, regardless of the actual procedure cost.

Coordination of Benefits (COB)

The process of determining the order of payment responsibility when a patient has coverage under multiple dental insurance plans. This prevents duplicate payments and ensures proper payment allocation.

Primary insurance: Pays first according to its benefit structure.

Secondary insurance: Pays after primary, covering some or all of the remaining patient responsibility.

COB example: Treatment cost: $1,000 Primary insurance allowed: $800, pays 80% = $640 Patient responsibility from primary: $160 Secondary insurance reviews the remaining $160 and may pay a portion based on their benefits.

Important note: COB doesn’t guarantee the patient pays nothing. The combined benefits from both plans cannot exceed 100% of the allowed amount.

Deductible

The amount a patient must pay out-of-pocket before insurance begins paying benefits. Deductibles typically reset annually with the benefit year.

Common deductible amounts

• Individual: $25-$100
• Family: $75-$300

Important distinction: Most plans waive deductibles for preventive care (cleanings, exams, x-rays), meaning insurance pays from the first dollar for these services.

Patient communication: “Your plan has a $50 deductible that you haven’t met yet this year. You’ll need to pay the first $50 of today’s treatment, then insurance covers 80% of the remaining allowed amount.”

Dual Coverage

When a patient has dental insurance coverage under two different plans, such as through their own employer and their spouse’s employer.

Patient benefits

• Potentially higher overall coverage
• Lower out-of-pocket expenses
• May cover services one plan excludes

Practice considerations

• Requires COB determination
• More complex verification and claims processing
• Longer payment timelines

Eligibility

Confirmation that a patient has active dental insurance coverage and is entitled to receive benefits under a specific plan. Eligibility verification should occur before every appointment.

What eligibility verification confirms

• Patient has active coverage
• Coverage effective dates
• Whether patient is listed as subscriber or dependent
• Basic plan type and coverage levels

What eligibility does NOT confirm

• Specific procedure coverage
• Remaining annual maximum
• Deductible status
• Frequency limitations
• Prior authorizations

Exclusions

Specific dental procedures, treatments, or conditions that an insurance plan will not cover under any circumstances. These vary significantly by plan.

Common exclusions

• Cosmetic procedures (veneers for aesthetics only, teeth whitening)
• Implants (on many plans)
• Procedures resulting from occupational injuries (covered by workers’ comp)
• Services covered by medical insurance (TMJ treatment, sleep apnea devices on some plans)
• Experimental or investigational procedures
• Services not dentally necessary
• Replacement of lost or stolen prosthetics

Best practice: Review plan exclusions during verification and communicate them clearly to patients before treatment.

Explanation of Benefits (EOB)

A detailed statement from an insurance company explaining how a claim was processed, what benefits were paid, and what the patient owes. EOBs are NOT bills but rather insurance statements of payment.

Key EOB sections

• Patient and provider information: Identifying details
• Claim information: Date of service, procedure codes, tooth numbers
• Amounts:
  • Billed amount (what practice charged)
  • Allowed amount (what insurance permits)
  • Deductible applied
  • Co-insurance amount
  • Insurance paid amount
  • Patient responsibility
• Claim status: Paid, denied, reduced, pending
• Remarks or codes: Explanations for payment decisions
• Appeal rights: Information about disputing decisions

Common EOB remarks

• “Payment reduced: exceeds plan allowance”
• “Deductible applied”
• “Frequency limitation”
• “Alternate benefit provision”
• “Not a covered benefit”
• “Pre-authorization required”

Best practice: Review every EOB carefully, compare to expected benefits, and follow up on discrepancies promptly.

Frequency Limitations

Restrictions on how often certain procedures are covered within a specific timeframe. These protect against unnecessary or excessive treatments.

Common frequency limitations

• Prophylaxis (cleanings): 2 per calendar year (or 1 every 6 months)
• Bitewing x-rays: 2 per calendar year
• Full mouth x-rays: 1 every 3-5 years
• Periodontal maintenance: 2-4 per year (varies by plan)
• Fluoride: 1-2 per year (age restrictions often apply)
• Crowns: 1 per tooth every 5-7 years
• Sealants: 1 per tooth per lifetime (age restrictions)

Important note: The counting period varies—some plans use calendar year, others use rolling months from the last service date.

Patient scenario: Patient had prophylaxis in March and returns in August requesting another cleaning. If their plan allows “2 per calendar year,” they’re eligible. If it’s “1 every 6 months,” they must wait until September.

In-Network (Participating Provider)

A dentist or dental practice that has signed a contractual agreement with an insurance company to provide services to plan members at negotiated fee schedules.

Benefits for practices

• Access to larger patient base
• Guaranteed payment (within contract terms)
• Reduced billing and collection challenges
• Marketing through insurance provider directories

Trade-offs

• Must accept insurance allowed amounts (often below usual fees)
• Contractual obligations and administrative requirements
• Cannot balance bill patients above allowed amounts

Benefits for patients

• Lower out-of-pocket costs
• Maximized insurance benefits
• No balance billing above allowed amounts

Least Expensive Alternative Treatment (LEAT)

Also called “Alternative Benefit” or “Substitution.” An insurance policy provision allowing the insurer to pay benefits based on the least expensive treatment that meets professionally accepted standards, even if the dentist provides a more expensive alternative.

Example scenario

• Dentist recommends and places a posterior porcelain crown ($1,200)
• Insurance determines an amalgam restoration would be adequate ($180)
• Insurance pays benefits based on the amalgam fee structure
• Patient is responsible for the difference between the two procedures

Patient communication: “Your insurance plan includes an alternative benefit clause. While we’re recommending a crown, your insurance may pay based on a filling fee since that’s the least expensive treatment that could address the issue. You’d be responsible for the difference.”

Limitations

Restrictions or conditions placed on coverage for specific procedures. These can include waiting periods, age restrictions, or procedural requirements.

Common limitation types

• Waiting periods: No coverage for major services for 6-12 months after enrollment
• Age restrictions: Sealants only covered for patients under 16
• Prior authorization: Major procedures require pre-approval
• Missing tooth clause: Won’t cover replacement of teeth extracted before coverage began
• Replacement limitations: Crowns only covered once per 5 years per tooth

Maximum Out-of-Pocket

The most a patient will pay during a benefit year before insurance covers 100% of additional costs. This is less common in dental insurance than medical insurance, but some plans include it.

Example: A plan might have a $2,000 out-of-pocket maximum. Once a patient has paid $2,000 in deductibles and co-insurance, the plan covers 100% of remaining covered services for that benefit year.

Out-of-Network (Non-Participating Provider)

A dentist or dental practice that has NOT signed a contract with an insurance company. These providers can set their own fees and are not bound by insurance fee schedules.

For practices

• Freedom to set fees at usual and customary rates
• No contractual obligations
• Can balance bill patients
• May receive lower patient volume from insurance networks

For patients

• Higher out-of-pocket costs
• Must pay difference between billed charges and insurance allowed amounts
• May need to submit claims themselves (though most offices still do this)
• Benefits calculated at lower reimbursement levels

Pre-Authorization (Prior Authorization)

Approval from an insurance company obtained BEFORE providing treatment, confirming that a specific procedure will be covered and indicating the expected benefit amount. Also called pre-certification.

When typically required

• Major procedures over certain dollar thresholds ($300-$500+)
• Specialized treatments (surgical extractions, periodontal surgery)
• Orthodontic treatment
• Any procedure the insurance company specifies in their plan documents

Important distinction: Pre-authorization is NOT a guarantee of payment. Final benefits depend on:

• Patient eligibility at time of service
• Verification of submitted information
• Plan benefits remaining at service date
• Accurate claim submission

Timeline: Most pre-authorizations are processed within 7-14 business days, though complex cases may take longer.

Best practice: Always verify plan requirements for pre-authorization and obtain approval before beginning treatment to avoid claim denials.

Pre-Determination (Pre-Treatment Estimate)

A request submitted to insurance before treatment asking them to review proposed treatment and estimate benefits. Unlike pre-authorization, this is NOT required and is for informational purposes only.

Benefits of pre-determinations

• Provides accurate benefit estimates for patient financial planning
• Reduces surprise bills and patient dissatisfaction
• Identifies coverage issues before treatment
• Establishes documented treatment necessity
• Helps with case acceptance by showing insurance contribution

Typical timeline: 10-20 business days for response

When to use pre-determinations

• Complex treatment plans
• Expensive procedures (crowns, bridges, implants)
• When patient requests coverage confirmation
• Procedures with questionable coverage (aesthetic components)
• Treatments involving alternative benefit provisions

Premium

The amount paid (usually monthly) by the employer and/or employee to maintain dental insurance coverage. This is paid regardless of whether benefits are used.

Patient confusion: Many patients believe that paying premiums means they shouldn’t have out-of-pocket costs. Education about deductibles, co-insurance, and annual maximums is essential.

Dental Claims Processing Terms

Appeal

A formal request to an insurance company asking them to reconsider a claim denial or reduced payment. Most insurance companies have specific appeal procedures and timelines.

Common reasons for appeals

• Claim denied but procedure was covered under plan terms
• Medical necessity was questioned but is documented
• Procedure was downcoded inappropriately
• Benefits were calculated incorrectly
• Wrong fee schedule applied

Appeal components

• Written letter explaining why reconsideration is warranted
• Supporting documentation (clinical notes, x-rays, photos, periodontal charting)
• Copy of original claim
• Copy of EOB showing denial or reduction
• References to plan documents supporting coverage
• Any relevant clinical research or standards of care

Timeline: Most insurance companies require appeals within 90-180 days of the original determination.

Success tips

• Clearly cite plan language supporting coverage
• Include comprehensive clinical documentation
• Reference accepted standards of care
• Be professional and fact-based, not emotional
• Follow up regularly until resolved

Bundling

An insurance practice of combining multiple related procedures into a single code, paying for only one service when several are billed. This often reduces reimbursement compared to paying for each service separately.

Common bundling scenarios:

Example 1: Core and Crown

• Practice bills: Core buildup (D2950) + Crown (D2740)
• Insurance bundles: Pays only for crown, includes core in crown fee
• Reasoning: Core is considered part of crown preparation

Example 2: Scaling and Root Planing with Periodontal Maintenance

• Practice bills: SRP (D4341) in February, then Perio Maintenance (D4910) in April
• Insurance bundles: Won’t pay both; considers them the same service type
• Reasoning: Too close together; one service encompasses the other

Example 3: Multiple Visits for Same Procedure

• Practice bills: Two appointments for quadrant SRP
• Insurance bundles: Pays as single procedure regardless of appointments
• Reasoning: Treatment is one episode of care

Why bundling occurs

• Prevents billing for procedures considered part of a comprehensive service
• Enforces insurance view of what constitutes a complete procedure
• Reduces duplicate or overlapping payments

How to address

• Submit comprehensive narratives explaining why separate procedures were necessary
• Include documentation showing procedures were distinct and necessary
• Reference CDT code descriptors and ADA guidelines
• Appeal bundling decisions with clinical justification

Claim

A formal request submitted to an insurance company for payment of dental services provided to a covered patient. Claims include procedure codes, diagnoses, fees, and supporting information.

Claim types

• Electronic claims: Submitted digitally through clearinghouses (97% of claims)
• Paper claims: ADA claim form mailed or faxed (3% of claims, being phased out)

Required claim information

• Patient demographics and insurance information
• Subscriber information if patient is dependent
• Provider information and NPI number
• Date of service
• CDT procedure codes
• Tooth numbers/surfaces when applicable
• Fees charged
• Diagnosis codes (ICD-10)
• Treating dentist information
• Place of service

Claim submission timeline: Most insurance contracts require claims to be submitted within 90-365 days of service date. This is called “timely filing.”

Clean Claim

A claim submitted without dental billing and coding errors that can be processed and paid without requesting additional information from the provider. Clean claims typically process within 7-14 days.

Clean claim characteristics:

• All required fields completed accurately
• Valid procedure codes with proper modifiers
• Appropriate diagnosis codes
• Correct patient and insurance information
• Valid provider credentials
• Proper documentation attached when required
• No internal conflicts or errors

Industry benchmark: Practices should achieve 95% or higher clean claim rates.

Benefits of high clean claim rates

• Faster payment
• Reduced administrative costs
• Better cash flow
• Lower claim denial rates
• Less staff time on rework

Claim Rejection vs. Claim Denial

These terms are often used interchangeably but have distinct meanings:

Claim Rejection: A claim that was never processed due to errors or missing information. The claim was stopped before entering the adjudication system.

Common rejection reasons

• Invalid subscriber ID or patient ID
• Patient not found in system
• Missing required fields
• Invalid procedure codes
• Eligibility issues

Resolution: Correct errors and resubmit. Rejected claims don’t count against timely filing limits if resubmitted promptly.

Claim Denial: A claim that was processed but payment was denied for coverage or policy reasons. The claim went through adjudication but was determined non-payable.

Common denial reasons

• Service not covered under plan
• Frequency limitations exceeded
• Deductible not met
• Annual maximum exhausted
• Missing pre-authorization
• Not medically necessary
• Duplicate claim

Resolution: May require appeal, additional documentation or patient becomes responsible for payment.

Clearinghouse

An essential tool in modern dental billing is an electronic intermediary that receives claims from dental practices, scrubs them for errors, formats them according to insurance company specifications, and transmits them to the appropriate payers.

Clearinghouse benefits

• Single point of submission for multiple insurance companies
• Automated claim scrubbing reduces rejections
• Standardized format conversion
• Real-time rejection notifications
• Tracking and reporting capabilities
• Electronic remittance advice (ERA) processing

Popular dental clearinghouses

• DentalXChange
• NEA
• TriZetto
• Availity
• Office Ally

Cost: Clearinghouses typically charge per claim submission ($.25-$2.00) or monthly subscription fees.

Downcoding (Downgrading)

When an insurance company changes the procedure code submitted to a less expensive code, resulting in lower reimbursement. This is different from bundling.

Common downcoding scenarios

Example 1: Crown to Onlay

• Practice bills: Porcelain crown (D2740 – $1,200)
• Insurance downcodes to: Onlay (D2642 – $850)
• Reasoning: Insurance claims documentation doesn’t support need for full crown

Example 2: Periodontal Surgery to Deep Cleaning

• Practice bills: Osseous surgery (D4260 – $900 per quadrant)
• Insurance downcodes to: Scaling and root planing (D4341 – $300 per quadrant)
• Reasoning: Insurance questions medical necessity for surgery

Example 3: Composite to Amalgam

• Practice bills: Posterior composite (D2392 – $250)
• Insurance downcodes to: Amalgam restoration (D2161 – $150)
• Reasoning: Plan doesn’t cover tooth-colored fillings on posterior teeth

Why downcoding occurs

• Insurance believes documentation doesn’t support higher-level code
• Plan limitations or alternative benefit provisions
• Missing or inadequate clinical narratives
• Lack of x-rays or supporting evidence
• Insurance interpretation of medical necessity

How to prevent/address

• Submit comprehensive documentation with original claim
• Include detailed narratives explaining clinical necessity
• Attach x-rays, photos, and periodontal chartings
• Reference clinical standards and research
• Appeal downcoding decisions with enhanced documentation
• Ensure staff is trained in proper dental coding principles

Electronic Remittance Advice (ERA)

The electronic version of an EOB, providing detailed claim payment information in a standardized digital format that can be automatically posted to practice management software.

ERA benefits:

• Automatic payment posting
• Reduced manual entry errors
• Faster payment reconciliation
• Searchable electronic records
• Integration with practice management systems
• Reduced paper and storage costs

ERA vs. Paper EOB

• ERA: Electronic file automatically uploaded and posted
• Paper EOB: Must be manually reviewed and data entered

National Provider Identifier (NPI)

A unique 10-digit identification number assigned to healthcare providers by the Centers for Medicare and Medicaid Services (CMS). Required on all claims submissions.

NPI types:

• Type 1 (Individual): Assigned to individual dentists
• Type 2 (Organizational): Assigned to dental practices, groups, or corporations

Why it matters: Claims submitted without valid NPIs are automatically rejected. All billing dentists and the billing entity must have NPIs.

Obtaining an NPI: Apply through the NPPES (National Plan and Provider Enumeration System) at nppes.cms.hhs.gov

Pending Claim

A claim that has been received by the insurance company but hasn’t been fully processed or paid. Claims may be pending for various reasons requiring additional review or information.

Common reasons for pending status

• Waiting for coordination of benefits information
• Under review for medical necessity
• Awaiting additional documentation requested
• Pre-authorization being verified
• Claims under fraud investigation review
• High-dollar claims requiring manual review
• Missing or unclear information

Follow-up timeline: Contact insurance company if claim is pending longer than 30 days to determine reason and required action.

Timely Filing

The deadline by which claims must be submitted to insurance companies after the date of service. Missing timely filing deadlines results in automatic claim denial with no patient or insurance payment.

Common timely filing limits

• Most dental insurance: 90-365 days
• Medicare: 365 days (12 months)
• Medicaid: Varies by state (often 90-180 days)

Why it matters: Once the timely filing deadline passes, the practice cannot collect from insurance OR from the patient (unless the patient was informed of filing responsibility in advance).

Best practices

• Submit claims within 7-10 days of service
• Track claim submission dates
• Set up electronic reminders for claims approaching deadlines
• Have clear policies about patient responsibility when patients delay providing insurance information

Unbundling

The practice of billing individual procedure codes separately when a single comprehensive code should be used. Unbundling is considered fraudulent when done intentionally to increase reimbursement.

Example of inappropriate unbundling

• Correct coding: Comprehensive oral evaluation (D0150 – $85)
• Unbundled coding: Limited oral evaluation (D0140 – $60) + Periodontal evaluation (D0180 – $40) = $100
• Issue: These examinations are components of the comprehensive exam, not separate services

Another example

• Correct coding: Crown (D2740 – $1,200) includes preparation
• Unbundled coding: Crown prep (separate charge) + Crown (D2740)
• Issue: Crown preparation is included in the crown fee

Legal implications: Unbundling when done intentionally to increase reimbursement constitutes fraud and can result in:

• Insurance audits and payment recoupment
• Fines and penalties
• Loss of network participation
• Criminal charges in severe cases

Legitimate separate billing: Sometimes procedures that seem bundled are legitimately separate:

• Core buildup and crown when core is needed due to extensive caries (though some insurers still bundle)
• Separate quadrants of scaling and root planing performed on different dates
• Post and core followed by crown placement weeks later

When uncertain: Reference the CDT manual, contact the insurance company for coding guidance, and document clinical rationale thoroughly.

Dental Fee and Reimbursement Terms

Allowed Amount (Allowable Charge, Approved Amount)

The maximum amount an insurance company will consider for payment for a specific procedure. This is also called the “approved amount” or “recognized charge.”

Key concept: The allowed amount may be LESS than what the practice charges. In-network providers must accept the allowed amount as full payment (minus patient responsibility) and cannot bill patients for the difference.

Example

• Practice fee for crown: $1,400
• Insurance allowed amount: $1,000
• Insurance pays 50%: $500
• Patient co-insurance (50%): $500
• Practice writes off: $400 (difference between charged and allowed)

For out-of-network

• Practice can bill patient for the $400 difference (balance billing)
• Insurance calculates patient benefit on the allowed amount only

Balance Billing

The practice of billing patients for the difference between the dentist’s charged fee and the insurance allowed amount. This is only permissible for out-of-network providers.

In-network providers

• Cannot balance bill for covered services
• Must accept allowed amount as payment in full
• Contractually agreed to write off differences

Out-of-network providers

• Can balance bill patients
• Patients are responsible for:
  • Their co-insurance on the allowed amount
  • Plus the difference between charged fee and allowed amount

Balance billing example

• Procedure charge: $1,500
• Insurance allowed amount: $1,000
• Insurance pays 50%: $500
• Patient’s 50% co-insurance: $500
• Balance bill to patient: $500 (difference between $1,500 and $1,000)
• Total patient pays: $1,000

Capitation

A payment arrangement where the dental practice receives a fixed monthly payment per enrolled patient, regardless of whether the patient receives services. Common in HMO dental plans.

How it works

• Practice receives fixed amount per member per month (PMPM)
• Typical PMPM: $3-$15 per enrolled patient
• Practice must provide all covered services included in capitation
• No additional payment for covered services
• Some services may be fee-for-service on top of capitation

Example

• Practice has 500 capitated patients at $8 PMPM
• Monthly capitation payment: $4,000
• Practice must provide all covered preventive and basic services
• Major services may be fee-for-service at reduced rates

Financial risk: Practice assumes risk that actual service costs may exceed capitation payments if utilization is high.

Benefits

• Predictable monthly revenue
• Large patient base
• Simplified billing for capitated services

Challenges

• Financial risk with high-utilizing patients
• Administrative complexity
• Lower per-service reimbursement effective rates

Contractual Adjustment (Write-Off)

The difference between a practice’s standard fee and the insurance allowed amount that must be written off when participating in a network. This is a non-collectible amount.

Why it exists: Network participation contracts require providers to accept reduced fees in exchange for patient volume and guaranteed payment.

Calculation

• Practice fee: $200
• Allowed amount: $150
• Insurance pays (80%): $120
• Patient pays (20%): $30
• Contractual adjustment: $50 (the difference written off)

Accounting: Contractual adjustments are posted to patient accounts to zero out the non-collectible balance, ensuring patient ledgers accurately reflect what they owe.

Analysis: Practices should regularly analyze total contractual adjustments by insurance plan to evaluate profitability of network participation.

Customary Fee

The fee typically charged by dentists in a specific geographic area for a particular procedure. Insurance companies historically used customary fees as part of UCR calculations.

Historical context: Before negotiated fee schedules became common, insurance companies surveyed dentist fees in geographic areas to determine “customary” amounts, typically set at the 90th percentile of fees charged.

Modern application: Less relevant today as most insurance operates on negotiated fee schedules or percentiles of fee data, not true customary surveys.

Fee Schedule

A comprehensive list of fees for dental procedures, including:

Practice fee schedule

• The fees your practice charges for each procedure
• Should be reviewed and updated annually
• Based on overhead, desired profit margins, regional competition, and expertise level

Insurance fee schedule

• The amounts insurance companies allow for each procedure
• Negotiated for in-network contracts
• Vary significantly between insurance companies
• Change periodically (annually or biennially)

Fee schedule example

Strategy: Maintain your practice fee schedule at appropriate market rates even for in-network plans, as this establishes the starting point for contractual adjustments and affects out-of-network calculations.

Maximum Allowable Charge (MAC)

The highest fee an insurance company will recognize for a specific procedure. This term is essentially synonymous with “allowed amount” or “maximum allowable fee.”

Usage: More commonly referenced in managed care contracts specifying the MAC for each procedure code.

Prevailing Fee

Historically, the fee most commonly charged by dentists in a geographic area. Similar to customary fee, this concept has been largely replaced by negotiated fee schedules in modern insurance.

Reasonable Fee

A fee that is considered appropriate based on the complexity of the case, the skill required, the time invested, and other relevant factors. This is a more subjective determination sometimes used in insurance appeals.

Example usage: When appealing a reduced payment, you might argue: “Given the complexity of this case requiring additional surgical time and advanced techniques, our fee of $X is reasonable and should be honored.”

Table of Allowances

A fee schedule listing the specific dollar amounts an insurance plan will allow for each covered procedure. This is essentially the insurance company’s fee schedule provided to network participants.

Example from a table of allowances

• D0120 Periodic oral evaluation: $45
• D0210 Complete series x-rays: $125
• D1110 Prophylaxis adult: $85
• D2740 Crown porcelain fused to metal: $950

Usage: In-network providers reference the table of allowances to:

• Determine expected reimbursement
• Calculate patient estimates
• Understand contractual write-offs
• Plan practice production goals

Usual, Customary, and Reasonable (UCR)

A traditional method insurance companies used to determine reimbursement levels. While less common now (replaced by fee schedules), some plans still reference UCR.

Components

Usual Fee: The fee the dentist typically charges for a specific procedure in their practice.

Customary Fee: The range of fees charged by most dentists in the same geographic area for the same procedure. Historically set at the 90th percentile of surveyed fees.

Reasonable Fee: A fee that meets the usual and customary criteria AND is justified by special circumstances of the case (complexity, time, difficulty).

How UCR worked historically

1. Insurance company determines customary fee for procedure in geographic area
2. Compares dentist’s usual fee to customary fee
3. Reimburses based on the LOWER of the two
4. Patient pays deductible plus co-insurance percentage

Modern reality: Most insurance now operates on:

• Negotiated fee schedules (in-network)
• Percentile of fee data (out-of-network)
• Fixed tables of allowances

Why you still hear about UCR

• Some patients’ plans still reference it in plan documents
• Term is used generically to mean “insurance fee schedule”
• Older plans may still calculate benefits this way

Dental Coding and Documentation Terms

CDT Code (Code on Dental Procedures and Nomenclature)

The standardized coding system for dental procedures maintained by the American Dental Association (ADA). CDT codes are updated annually and are required for all insurance claims.

CDT code structure

• Format: 5 characters beginning with “D” followed by 4 digits
• Example: D2740 (Crown – porcelain fused to high noble metal)

CDT categories

• D0100-D0999: Diagnostic (exams, x-rays)
• D1000-D1999: Preventive (cleanings, fluoride, sealants)
• D2000-D2999: Restorative (fillings, crowns, inlays/onlays)
• D3000-D3999: Endodontics (root canals, apicoectomies)
• D4000-D4999: Periodontics (scaling, surgery, grafts)
• D5000-D5899: Prosthodontics, removable (dentures, partials)
• D5900-D5999: Maxillofacial prosthetics
• D6000-D6199: Implant services
• D6200-D6999: Prosthodontics, fixed (bridges)
• D7000-D7999: Oral and maxillofacial surgery (extractions, surgical procedures)
• D8000-D8999: Orthodontics
• D9000-D9999: Adjunctive general services (anesthesia, consultations, palliative treatment)

Annual updates: CDT codes change each January 1st with additions, deletions, and revisions. Practices must update coding annually.

Importance: Using correct, current CDT codes is essential for:

• Accurate claims processing
• Proper reimbursement
• Compliance with insurance contracts
• Avoiding fraud allegations

Diagnosis Code (ICD-10)

While CDT codes represent procedures, dental coding also requires diagnosis codes. The International Classification of Diseases, 10th Revision codes used to document the patient’s condition or disease that necessitates dental treatment. While more prominent in medical billing, dental claims increasingly require ICD-10 codes.

Common dental ICD-10 codes

• K02.9: Dental caries, unspecified
• K04.7: Periapical abscess without sinus
• K05.10: Chronic gingivitis, plaque induced
• K05.30: Chronic periodontitis, unspecified
• K08.129: Complete loss of teeth due to trauma or disease
• Z01.20: Dental examination
• Z01.21: Dental examination with abnormal findings

Why diagnosis codes matter

• Establish medical necessity for treatment
• Support procedure code justification
• Required for medical cross-coding (billing dental procedures to medical insurance)
• Increasingly required by dental insurance companies
• Essential for data analytics and treatment outcome tracking

Best practice: Include appropriate diagnosis codes on all claims, even when not required, to strengthen medical necessity documentation.

Modifier

A two-character code appended to a procedure code to provide additional information about the service performed. Modifiers indicate that a service was altered by specific circumstances but not changed in definition or code.

Common dental modifiers

-21: Prolonged service Used when a procedure takes significantly longer than typical due to complexity or unusual circumstances.

-22: Increased procedural services Indicates the service required substantially more work than usually required.

-52: Reduced services Used when a procedure is partially reduced or eliminated at the dentist’s discretion.

Example: D7210-52 (surgical extraction reduced because tooth fractured and part was already missing)

-53: Discontinued procedure Procedure started but discontinued due to patient circumstances or complications.

-76: Repeat procedure by same dentist Used when the same procedure is repeated on the same day by the same dentist.

Example: D7140-76 (extraction of second tooth on same visit, same dentist)

-77: Repeat procedure by another dentist The procedure performed was repeated by a different dentist.

Tooth/Area Modifiers (Surface modifiers)

• -M: Mesial surface
• -O: Occlusal surface
• -D: Distal surface
• -B: Buccal/facial surface
• -L: Lingual surface
• -I: Incisal surface

Quadrant/Arch modifiers:

• -UR: Upper right quadrant
• -UL: Upper left quadrant
• -LR: Lower right quadrant
• -LL: Lower left quadrant

Importance: Correct modifier usage:

• Prevents claim denials for duplicate procedures
• Justifies unusual circumstances
• Explains multiple procedures on same date
• Clarifies reduced or discontinued services

Caution: Modifier abuse (such as excessive use of -21 or -22) can trigger audits. Use only when truly warranted and document thoroughly.

Narrative (Clinical Narrative)

A written explanation submitted with an insurance claim describing the clinical situation, treatment rationale, and procedures performed. Narratives provide context beyond what procedure codes communicate.

When narratives are essential:

• Complex or unusual cases
• Procedures likely to be questioned
• Multiple procedures on same tooth
• Accelerated treatment timelines
• Procedures with aesthetic components
• When alternative treatments were considered
• Cases involving medical necessity questions

Effective narrative components

1. Chief complaint/presenting problem “Patient presented with severe pain lower left quadrant, swelling, and difficulty chewing.”

2. Clinical findings “Clinical examination revealed extensive decay on tooth #19 extending subgingivally, mobility grade 2, 8mm pockets, and radiographic evidence of periapical pathology and bone loss.”

3. Treatment options considered “Treatment options discussed included extraction vs. root canal therapy with crown lengthening and crown restoration. Patient elected to maintain tooth.”

4. Procedure performed and rationale “Due to subgingival decay extent, crown lengthening (D4249) was necessary prior to restoration to establish adequate ferrule and ensure restorative margins would be supragingival. Following healing, root canal therapy (D3310) was completed, followed by post and core (D2952) due to extensive structure loss, and final restoration with crown (D2740).”

5. Clinical necessity “Crown lengthening was clinically necessary to expose sound tooth structure for restoration and to maintain periodontal health with proper margin placement.”

Narrative best practices

• Be factual and clinical, not defensive or emotional
• Reference clinical standards and research when applicable
• Include specific measurements, mobility grades, pocket depths
• Explain why less expensive alternatives weren’t suitable
• Keep it concise but comprehensive (typically 3-6 sentences)
• Avoid excessive technical jargon; write for non-clinical reviewers

Example narrative for contested procedure

“Patient presented with fractured amalgam restoration #30 with recurrent decay extending subgingivally. Radiographs showed decay approaching pulp. Due to extensive remaining tooth structure loss (>50%) following decay removal, a crown (D2740) rather than simple restoration was necessary to restore function and prevent further fracture. Tooth #30 serves as abutment for existing fixed bridge, making its preservation critical to avoiding prosthetic replacement.”

Submission: Attach narratives at initial claim submission when questionable coverage exists, rather than waiting for claim review or denial.

Tooth Numbering System

The standardized method for identifying specific teeth. The Universal Numbering System is standard in the United States.

Universal Numbering System (US)

Permanent teeth (1-32)

• Upper right: 1-8 (starting with third molar, ending with central incisor)
• Upper left: 9-16 (starting with central incisor, ending with third molar)
• Lower left: 17-24 (starting with third molar, ending with central incisor)
• Lower right: 25-32 (starting with central incisor, ending with third molar)

Primary teeth (A-T):

• Upper right: A-E
• Upper left: F-J
• Lower left: K-O
• Lower right: P-T

Alternative systems

• Palmer Notation: Uses quadrant symbols and numbers 1-8
• FDI System (International): Two-digit system (quadrant + tooth position)

Importance: Accurate tooth numbering on claims is critical. Incorrect tooth numbers lead to:

• Claim denials
• Frequency limitation issues (if previously treated)
• Coordination of benefits problems
• Fraud concerns

Best practice: Always verify tooth numbers match clinical charts, x-rays, and procedure notes before claim submission.

Dental Patient Financial Terms

Collections

The process of obtaining payment for outstanding patient balances. Collections can be in-house (by practice staff) or outsourced to third-party collection agencies.

Collection stages:

Stage 1: Preventive (before services)

• Clear financial policies
• Estimate discussions
• Payment plan arrangements
• Collection of deposits

Stage 2: Point of service (at appointment)

• Collecting co-pays, deductibles, and estimated patient portions
• Payment plan down payments
• Updating payment methods on file

Stage 3: In-house collections (0-90 days past due)

• Statement mailings (typically 3-4 cycles)
• Phone call reminders
• Email or text payment reminders
• Payment plan negotiation

Stage 4: Advanced collections (90-120 days)

• Final notice letters
• Certified mail notices
• Payment demand letters
• Last opportunity for payment arrangements

Stage 5: External collections (120+ days)

• Account turned over to collection agency
• Credit reporting (if permitted and disclosed)
• Small claims court filing
• Legal action

Best practices

• Have clear, written financial policies
• Communicate payment expectations upfront
• Make payment easy (multiple methods, online options)
• Contact patients early when balances become past due
• Be empathetic but firm about payment obligations
• Document all collection attempts
• Comply with Fair Debt Collection Practices Act (FDCPA)

Guarantor

The person legally responsible for paying a patient’s dental bills. This may or may not be the patient themselves.

Common guarantor scenarios

• Parent is guarantor for minor child’s account
• Spouse is guarantor for partner’s account
• Adult child is guarantor for elderly parent’s account
• Legal guardian is guarantor for ward’s account

Why it matters

• Determines who receives bills and collection communications
• Establishes who signs financial agreements
• Affects credit reporting decisions
• Important for collection efforts

Best practice: Clearly identify and document the guarantor in your practice management system, obtain their signature on financial policies, and verify contact information regularly.

Payment Plan

An arrangement allowing patients to pay treatment costs over time in installments rather than in full at time of service.

In-house payment plans

• Managed directly by the practice
• No third-party involvement
• Practice assumes risk of non-payment
• No interest charges (typically) but may have finance charges

Typical in-house payment plan structure

• Down payment: 20-30% of total treatment cost
• Monthly payments: 3-12 months
• Automatic payment methods preferred (credit card on file, ACH)
• Signed payment agreement required

Third-party financing options

• CareCredit
• LendingClub
• Alphaeon Credit
• Proceed Finance

Third-party benefits

• Practice receives full payment immediately
• Financing company assumes collection risk
• Patients may receive promotional interest rates (6-24 months no interest)
• Higher approval rates for patients with various credit levels

Payment plan policies

• Set minimum treatment amounts requiring payment plans ($500+)
• Establish maximum plan lengths
• Require automatic payment methods
• Define consequences of missed payments
• Include treatment completion clauses (e.g., “Final prosthetic placement withheld until balance paid”)

Documentation: Always use written payment plan agreements signed by guarantor including:

• Total amount financed
• Down payment amount
• Payment schedule (amount and due dates)
• Late payment consequences
• Finance charges if applicable
• Default terms

Statement

A periodic bill sent to patients showing:

• Current balance
• Recent charges
• Recent payments and adjustments
• Insurance payments
• Aging of balance (current, 30, 60, 90+ days)
• Payment instructions

Statement cycles

• Most practices: Monthly
• High-volume practices: Weekly or bi-weekly
• Balance-specific: Some practices only send statements when balance exceeds threshold ($25-$50)

Effective statements include

• Clear balance due prominently displayed
• Payment due date
• Multiple payment options
• Online payment links
• Practice contact information
• Message area for collection notices or payment reminders

Digital statements

• Email statements with PDF attachments
• Patient portal access
• Text message payment reminders
• Online balance viewing

Best practice: Include payment options directly on statements (QR codes for online payment, payment portal links) to make paying easy and immediate.

Third-Party Liability

Situations where an entity other than the patient or their dental insurance may be responsible for payment. This significantly affects insurance claims and patient billing.

Common third-party liability scenarios

Workers’ Compensation: Dental injuries occurring at work or due to work activities are covered by employer’s workers’ comp insurance, not patient’s dental insurance.

Example: Employee falls at workplace and fractures teeth. Treatment is billed to workers’ compensation carrier.

Auto/Vehicle Insurance: Dental injuries from car accidents are typically covered by auto insurance under medical payments or liability coverage.

Example: Patient injured in car accident requiring multiple crowns and implant. Treatment billed to auto insurance company.

Homeowners/Liability Insurance: Injuries occurring on someone else’s property or caused by another party may be covered by liability insurance.

Example: Patient tripped on uneven sidewalk at commercial property, fracturing front teeth. Property owner’s liability insurance covers treatment.

School/Sports Insurance: Injuries during school activities or organized sports may be covered by institutional insurance policies.

How third-party liability affects billing

• Patient’s dental insurance is NOT primary
• Third-party carrier must be billed first
• Often requires special forms and documentation
• Attorney involvement in some cases
• Settlement contingency may delay payment
• Higher reimbursement rates (typically UCR rather than reduced network rates)

Documentation requirements:

• Detailed incident report
• Date, time, and location of injury
• How injury occurred
• Police reports (auto accidents)
• Witness statements
• Photos of injuries
• Complete clinical documentation

Practice considerations

• Verify third-party liability before billing dental insurance
• Obtain attorney information if patient is represented
• May require letter of protection (LOP) for treatment pending settlement
• Payment may be delayed until case settlement
• Clear patient communication about payment timeline

Dental Compliance and Regulatory Terms

Audit

A systematic examination of a dental practice’s dental billing and coding practices, clinical documentation, and compliance practices conducted by insurance companies, government agencies, or internal reviewers.

Types of audits:

Insurance audits

• Random selection of claims
• Triggered by billing patterns (high frequency, unusual codes)
• Complaint-driven
• Request clinical records and documentation
• Can result in payment recoupment

Government audits (Medicare/Medicaid)

• More formal and comprehensive
• Regulatory compliance focus
• Higher stakes (fines, program exclusion)
• May be routine or for-cause

Internal audits:

• Practice-initiated self-assessment
• Proactive compliance measure
• Identifies problems before external audit
• Educational for staff

What auditors review

• Documentation completeness and accuracy
• Coding accuracy (correct CDT codes for documented procedures)
• Medical necessity justification
• Frequency compliance
• Proper diagnosis codes
• Authorization documentation
• Signature and dating of records
• Consistency between clinical notes, x-rays, and billed procedures

Common audit findings

• Incomplete documentation
• Procedures billed without adequate clinical notes
• Overcoding (billing higher level than documented)
• Missing radiographs or other supporting documentation
• Unsigned treatment notes
• Duplicate billing
• Unbundling

If audited

• Respond promptly to all requests
• Provide only requested information
• Organize documentation clearly
• Consider consulting with dental attorney or compliance expert
• Review findings carefully
• Appeal inappropriate determinations
• Implement corrective action plans
• Provide staff training to prevent future issues

Audit prevention

• Maintain thorough, contemporaneous documentation
• Regular internal audits
• Staff training on coding and documentation
• Consistent policies and procedures
• Monitor billing patterns for red flags

Credentialing

The process of verifying a dentist’s qualifications, licensure, education, and professional history to participate in insurance networks and bill for services.

Credentialing requirements

• Completed application with personal and professional information
• Copy of dental license (current and valid)
• DEA certificate (if applicable)
• Proof of malpractice insurance
• National Provider Identifier (NPI)
• Educational transcripts or diploma
• Board certification (if applicable)
• Hospital privileges documentation (if applicable)
• Work history and references
• Background checks
• Medicare/Medicaid sanctions check

Timeline: Initial credentialing typically takes 90-180 days. Re-credentialing occurs every 2-3 years.

Why it matters: Dentists cannot bill insurance plans until fully credentialed. Claims submitted before credentialing completion will be denied.

Practice management

• Begin credentialing process well before joining practices
• Maintain current documentation
• Monitor re-credentialing deadlines
• Update any changes promptly (address changes, license renewals)

Electronic Data Interchange (EDI)

The computer-to-computer exchange of business information using a standardized format. In dental billing, EDI enables electronic claim submission, eligibility verification, and remittance advice.

Common EDI transactions

• 837 Dental: Electronic claims submission
• 835: Electronic remittance advice (ERA)
• 270/271: Eligibility inquiry and response
• 276/277: Claims status inquiry and response
• 278: Authorization/referral requests

Benefits

• Faster claim processing (days vs. weeks)
• Reduced errors through automated validation
• Lower costs (no paper, postage, manual processing)
• Real-time eligibility verification
• Automated payment posting
• Improved cash flow

HIPAA compliance: EDI transactions must comply with HIPAA standards for format, security, and privacy.

Explanation of Medicare Benefits (EOMB)

Similar to an EOB but specific to Medicare claims. While traditional Medicare doesn’t cover routine dental, it covers certain dental services related to medical conditions.

Medicare dental coverage (limited)

• Dental examination prior to kidney transplant or heart valve replacement
• Jaw reconstruction following traumatic injury
• Oral cancer treatment
• Extractions necessary prior to radiation treatment for head/neck cancer
• Dental services integral to covered medical treatment

When dental practices bill Medicare

• Must be enrolled as Medicare provider
• Use HCPCS/CPT codes (not CDT codes)
• Submit CMS-1500 form (not ADA dental claim form)
• Include medical diagnosis codes justifying necessity
• Complex credentialing and billing requirements

HIPAA (Health Insurance Portability and Accountability Act)

Federal legislation establishing standards for protecting patient health information privacy and security. Compliance is mandatory for all dental practices.

Key HIPAA components affecting dental billing

Privacy Rule

• Patient rights to access their health information
• Limits on how health information can be used and shared
• Requirements for patient authorization for certain uses
• Notice of Privacy Practices must be provided to patients

Security Rule

• Administrative, physical, and technical safeguards for electronic protected health information (ePHI)
• Encryption requirements
• Access controls
• Audit trails
• Disaster recovery plans

Breach Notification Rule

• Requirements for notifying patients, HHS, and sometimes media of data breaches
• Timeline for notifications
• Documentation requirements

Dental billing HIPAA considerations

• Patient authorization for information release to insurance
• Secure transmission of claims and patient data
• Protecting PHI in EOBs, statements, and communications
• Proper disposal of documents containing PHI
• Business associate agreements with billing services, clearinghouses

Penalties for violations

• Civil penalties: $100 – $50,000 per violation
• Criminal penalties: Up to $250,000 fines and 10 years imprisonment for knowing violations
• Loss of license and practice closure in severe cases

Compliance requirements

• Written policies and procedures
• Staff training (annual)
• Designated privacy and security officers
• Risk assessments
• Incident response plans
• Documentation of compliance efforts

Medical Necessity

The determination that a dental procedure is appropriate, reasonable, and required to diagnose or treat a patient’s condition according to accepted standards of practice.

Factors determining medical necessity:

• Patient’s symptoms and clinical findings
• Diagnosis and clinical condition
• Appropriateness of procedure for condition
• Evidence-based treatment standards
• Availability of alternative treatments
• Expected outcomes

Documentation proving medical necessity

• Comprehensive clinical notes
• Diagnostic records (x-rays, photos, models)
• Periodontal charting
• Diagnostic test results
• Treatment progression notes
• Rationale for treatment choice

Common medical necessity challenges

Scenario 1: Crown vs. Large Filling

• Insurance question: Why crown instead of less expensive filling?
• Documentation needed: Percentage of tooth structure remaining, fracture lines, previous restoration history, functional requirements

Scenario 2: Frequent Cleanings

• Insurance question: Why more than 2 prophylaxis per year?
• Documentation needed: Periodontal diagnosis, pocket depths, bleeding points, patient’s disease progression, previous treatment response

Scenario 3: Replacement Timing

• Insurance question: Why replace crown after only 3 years?
• Documentation needed: Defect description, fracture evidence, recurrent decay, functional failure

Appeals based on medical necessity: When insurance denies based on medical necessity, appeal with:

• Detailed clinical narrative
• Complete diagnostic documentation
• Reference to clinical standards of care
• Professional literature supporting treatment
• Photos demonstrating condition
• Specialist consultation notes if applicable

Best practice: Document thoroughly at time of treatment, assuming you may need to justify medical necessity later.

Dental Practice Management Terms

Capitation Rate

The fixed per-member-per-month (PMPM) payment a practice receives for each enrolled patient in a capitation plan, regardless of services provided.

Calculation considerations

• Expected utilization rates
• Overhead costs
• Desired profit margin
• Demographics of enrolled population
• Geographic factors
• Competition

Financial modeling: Practice receives $8 PMPM for 1,000 patients = $8,000 monthly = $96,000 annually

If average patient uses

• 2 preventive visits = $180 value
• 0.5 restorative procedures = $150 value
• Average value: $330 per patient
• Total cost for 1,000 patients: $330,000
• Revenue: $96,000
• Loss: $234,000

This simplified example shows why practices must carefully evaluate capitation risk and patient utilization patterns.

Case Acceptance

The percentage of treatment plans that patients agree to proceed with. High case acceptance is critical for practice productivity and profitability.

Case acceptance calculation: (Number of treatment plans accepted / Total treatment plans presented) × 100

Industry benchmarks

• Excellent: 85-95%
• Good: 70-84%
• Needs improvement: Below 70%

Factors affecting case acceptance

• Quality of treatment plan presentation
• Trust and relationship with dentist
• Clear communication about necessity and benefits
• Transparent cost estimates and insurance coverage
• Payment options availability
• Urgency of treatment
• Patient financial situation

Improving case acceptance

• Present treatment plans chairside while findings are visible
• Use visual aids (intraoral cameras, x-rays, models)
• Explain “why” not just “what”
• Discuss consequences of declining treatment
• Provide written treatment plans with estimates
• Offer payment options
• Follow up on unscheduled treatment
• Train all staff in case presentation support

Charge Description Master (CDM)

The comprehensive list of all billable services, procedures, and products in a dental practice, including procedure codes, descriptions, and fees. Sometimes called a “fee schedule” or “procedure code master.”

CDM components

• CDT procedure codes
• Procedure descriptions
• Internal procedure IDs
• Practice fees
• Insurance allowed amounts (by carrier)
• Revenue codes
• General ledger codes for accounting
• Last update date

CDM maintenance

• Annual updates for new CDT codes (January 1)
• Fee adjustments (annually or as needed)
• Insurance fee schedule updates
• Addition of new procedures offered
• Deletion of obsolete procedures
• Audit and verification of accuracy

Best practice: Designate a staff member responsible for CDM maintenance, with quarterly reviews and annual comprehensive updates.

Clean Claim Rate

The percentage of insurance claims submitted that are paid on first submission without requiring corrections, additional information, or resubmission.

Calculation: (Number of clean claims paid on first submission / Total claims submitted) × 100

Industry benchmarks

• Excellent: 95-98%
• Good: 90-94%
• Needs improvement: Below 90%

Benefits of high clean claim rate

• Faster payment (improved cash flow)
• Reduced administrative costs
• Less staff time on claim follow-up
• Better payer relationships
• Fewer patient billing issues

Common reasons for “dirty” claims

• Missing or incorrect patient information
• Invalid insurance ID numbers
• Missing tooth numbers or surfaces
• Incorrect or outdated CDT codes
• Missing diagnosis codes
• Invalid provider NPIs
• Missing prior authorization
• Typographical errors

Improving clean claim rate

• Real-time eligibility verification
• Claims scrubbing software
• Staff training on accurate data entry
• Regular review of rejection reports
• Standardized claim submission checklists
• Updated procedure and diagnosis code libraries
• Quality control audits before submission

Days in Accounts Receivable

A key performance indicator measuring the average number of days it takes to collect payment for services. Lower numbers indicate better financial health.

Calculation: (Total Accounts Receivable / Average Daily Production) = Days in A/R

Example

• Total A/R: $150,000
• Annual production: $1,800,000
• Average daily production: $1,800,000 / 365 = $4,932
• Days in A/R: $150,000 / $4,932 = 30.4 days

Industry benchmarks

• Excellent: Less than 30 days
• Good: 30-45 days
• Concerning: 45-60 days
• Poor: Over 60 days

Improving days in A/R

• Collect payment at time of service
• Submit claims within 24-48 hours of service
• Follow up on unpaid claims at 14 days
• Send patient statements promptly
• Implement electronic claims and ERA
• Offer convenient payment options
• Clear financial policies
• Reduce accounts over 90 days through focused collection

Electronic Funds Transfer (EFT)

Direct deposit of insurance payments into the practice’s bank account rather than receiving paper checks. Often paired with ERA (electronic remittance advice) for complete electronic payment processing.

Benefits

• Faster access to funds (1-2 days vs. 7-10 days for mailed checks)
• Reduced check processing labor
• Eliminated risk of lost or stolen checks
• Automatic posting when combined with ERA
• Better cash flow management
• Lower banking fees
• Reduced paper and storage

Setup requirements

• Enrollment with each insurance company
• Banking information (routing and account numbers)
• Authorization forms
• May require practice management software compatibility

Best practice: Implement EFT with all insurance carriers that offer it, typically representing 80-90% of insurance payments.

Net Collection Percentage (Net Collection Ratio)

A critical financial metric showing what percentage of collectible production (after contractual adjustments) a practice actually collects.

Calculation: (Total Collections / [Total Production – Contractual Adjustments]) × 100

Example

• Total production: $1,000,000
• Contractual adjustments: $200,000
• Collectible production: $800,000
• Total collections: $760,000
• Net collection percentage: ($760,000 / $800,000) × 100 = 95%

Industry benchmarks

• Excellent: 98-100%
• Good: 95-97%
• Needs improvement: Below 95%

What affects net collection percentage

• Point-of-service collections
• Insurance claim follow-up
• Patient billing and collection effectiveness
• Write-offs for bad debt
• Fee schedule appropriateness
• Contractual adjustment amounts
• Claims management efficiency

Improving net collection percentage

• Verify insurance before appointments
• Collect patient portions at time of service
• Submit claims electronically and promptly
• Follow up on aged A/R aggressively
• Reduce bad debt write-offs
• Negotiate better insurance contracts when possible
• Implement financial policies consistently

Production

The total value of dental services provided during a specific period, regardless of payment collection. This is different from collections.

Production types

Gross production: Total value of all procedures at the practice’s regular fees.

Adjusted production: Gross production minus contractual adjustments (more accurate reflection of collectible revenue).

Production per day/hour: Measures practice productivity efficiency.

Production by provider: Tracks individual dentist or hygienist productivity.

Example

• Monday procedures total value: $8,500 (gross production)
• Contractual adjustments: $1,200
• Adjusted production: $7,300
• This is what the practice expects to collect (before patient portions)

Why production matters

• Measures practice productivity
• Tracks provider performance
• Forecasts revenue
• Evaluates schedule efficiency
• Guides staffing decisions
• Benchmarks growth

Production vs. Collections

• Production: Work performed (today)
• Collections: Money received (may be for work done weeks or months ago)
• Both metrics are essential for complete financial picture

Reimbursement Rate

The percentage of the practice’s standard fee that insurance companies actually pay. This varies significantly by insurance carrier and procedure.

Calculation: (Insurance Allowed Amount / Practice Fee) × 100

Examples

Factors affecting reimbursement rates

• Network participation (in vs. out-of-network)
• Insurance company fee schedules
• Geographic location
• Provider credentials and experience
• Negotiating leverage
• Procedure complexity

Strategic analysis: Practices should analyze reimbursement rates by:

• Insurance carrier (which pay best/worst)
• Procedure type (which procedures have lowest reimbursement)
• Provider (if multiple dentists)
• Patient volume (does volume offset low reimbursement)

Decision making: Use reimbursement rate analysis to:

• Determine which insurance networks to participate in
• Identify procedures with poor margins
• Negotiate better contracts
• Educate patients about out-of-network costs
• Set practice fees appropriately

Quick Reference: Common Acronyms

• ABN: Advanced Beneficiary Notice
• ADA: American Dental Association
• A/R: Accounts Receivable
• AOB: Assignment of Benefits
• CDM: Charge Description Master
• CDT: Code on Dental Procedures and Nomenclature
• COB: Coordination of Benefits
• DMO: Dental Maintenance Organization (HMO)
• EDI: Electronic Data Interchange
• EFT: Electronic Funds Transfer
• EOB: Explanation of Benefits
• EOMB: Explanation of Medicare Benefits
• ERA: Electronic Remittance Advice
• HIPAA: Health Insurance Portability and Accountability Act
• HMO: Health Maintenance Organization
• ICD: International Classification of Diseases
• LEAT: Least Expensive Alternative Treatment
• MAC: Maximum Allowable Charge
• NPI: National Provider Identifier
• PHI: Protected Health Information
• PMPM: Per Member Per Month
• PPO: Preferred Provider Organization
• UCR: Usual, Customary, and Reasonable

Frequently Asked Questions (FAQs)