High-Risk Payers in Dental Insurance: Types, Red Flags, and Best Practices

It’s very common in dentistry to treat patients and submit claims that are either underpaid or completely denied by insurance companies.

And it’s very disappointing for a dental provider who has worked very hard to make sure the patient walks out of the practice smiling.

It creates a big gap between your expected amount and the total earnings at the end of the month. And when earnings aren’t sufficient, a huge reason is that practices don’t identify high-risk payers.

It’s important to identify these payers in advance and address issues promptly so payments are complete, reimbursements are fast, and your revenue cycle runs smoothly.

Want to unlock the secret? In this blog, we’ll guide you through the types of high-risk payers, red flags associated with them, and best practices to avoid revenue loss with professional dental RCM services.

Who are High-Risk Payers in Dental Insurance?

In dentistry, the high-risk payers can be commercial dental insurance companies or state-run insurance plans, where your practice is at risk of losing revenue. The revenue loss can be due to a huge number of claim denials, payment delays, and underpayments.

Plus, dental insurers who regularly require documents for even routine procedures and more administrative work on each dental claim can also be considered risky. 

Another factor in the high-risk payer category is that their policies related to CDT codes, documentation requirements, and reimbursement rates/fee schedules change very quickly and without warning.

What are the Types of High-Risk Payers?

The following payer types are mostly risky in dental insurance:

Medicaid and Medicaid Managed Care Plans

Medicaid dental billing isn’t easy. Reimbursement rates are lower than those of commercial insurance plans. Plus, their billing requirements and coverage rules aren’t easy to comply with, and can vary by state. Prior authorization requirements and patient eligibility may change within a month, making it difficult for practices to follow these rules for compliant billing.

The result is a high claim denial rate, which is backed by Premier Inc. research. It reveals that Medicaid plans deny claims at 16.7%. Claim denial rates for Medicaid managed care plans are also closer at 15.1%, even though private insurance companies manage these benefits.

Due to the billing complexity, eligibility verification is required for patients at every visit, and practices must regularly follow up with them after submitting claims.

Medicare Advantage Plans

Medicare Advantage is the alternative to Medicaid Managed Care in Medicare dental programs. It’s managed by private insurance companies, and the denial rate is high. 

According to a 2019 survey, Medicare Advantage plans initially denied 17% of the claims. Years later, when Premier Inc. conducted a survey (which we’ve mentioned above), the claim denial rate was reduced to 15.7%, but it still accounts for a huge number of denials.

Pre-authorizations are a major reason for claim denials. Firstly, the requirements are very complex, and even when billers obtain them, MA plans can deny the claims, requiring rework on appeals.

According to the same study, only 54% of denied claims are overturned on appeals. And practices have to spend an average of $43.84 on denial management per claim. It consumes a lot of time in steps, like:

• Preparing and submitting appeals with complete documentation
• Following up with the payers to track their progress.

Commercial PPO Plans with Complex Rules

Some PPO plans have complex frequency limitation rules, bundling policies, and downcoding practices, which reduce reimbursement rates for practices, even when claims are clean and compliant with payer policies. Some procedures, like scaling and root planing (SRP), bitewing X-rays, and composite restorations, are common targets for automatic downcoding or denial.

Out-of-Network Treatments

If you’re treating a patient and not enrolled in the patient’s insurance network, collection becomes very difficult in most cases. The reason is that the payer reimburses the amount to the patient, instead of the provider or practice, because a practice isn’t contracted with the insurance company.

Balance billing disputes also arise here, as the insurance company may not reimburse the full amount to the patient. Out-of-network providers can charge their full fee to the patient, instead of following an in-network fee schedule and accepting payments according to payers’ set rates. This may create difficulty for the patient and practice.

Small or New Payers

If you’re working with a small or new payer, claim reimbursement can be very difficult. Unlike known payers like Aetna, BCBS, Cigna, Delta Dental, Humana, or United Healthcare, small payers don’t have a proper payment process and may not have a system for electronic claim submission. When you follow manual processes, these take a lot of time. Payers receive them late, review them, and reimburse at a later date, making it a very lengthy process. 

What are the Red Flags for High-Risk Payers?

The following situations are red flags that help you identify high-risk payers.

Increasing Claim Denial Rate

When your practice starts seeing a rise in the number of claim denials, it’s a worrying situation. While it’s mostly assumed that payers deny claims due to billing errors, sometimes mistakes can be at the payer’s end. The payer’s system may not have accurately reviewed the claim, resulting in a denial.

It’s important to reduce your claim denial rate, at least below 35% on average, but if you see denials piling up and exceeding this percentage, classify the payer as high-risk. You may also segment it by a certain dental procedure/CDT code, where you’re experiencing more claim denials than other procedures.

Delayed Claim Reimbursement

In an era when technology is booming and automation has made billing faster and easier, payments shouldn’t be late.

But practices still face delays in dental claim reimbursements. The reimbursements aren’t as fast as your claim submissions. In an ideal situation, the turnaround time for reimbursements shouldn’t exceed 48 hours. 

If your payments are delayed for an extended period and it becomes routine for most claims, the payer is high-risk.

Growing Number of Underpayments

It’s common for dental payers to downcode the actual procedure to a lower-cost alternative without justifying their reason, or reimburse a lesser amount than the agreed-upon rate in the contracted fee schedule.

When you experience a growing pattern in underpayments from a dental payer, it’s time to categorize it as risky, take steps to recover revenue, and prevent these issues in the future.

Example: When you submit CDT code D2392 for a posterior composite filling on 2 surfaces, but the payer downgrades it to CDT D2140 for an amalgam filling, reimbursement is reduced.

High Appeal Rate

When your claims are denied unfairly, or you’re being paid less repeatedly by a payer, you have to manage that by resubmitting these claims with appeals. 

It just doubles your effort, as you have to start the claim submission process over again to correct denials or request fair reimbursement under the fee schedule for underpayments.

Your staff’s workload and appeal rate increase, which isn’t something a dental practice desires.

Slow Response to Appeals and Follow-Ups

Some payers may respond to appeals, or follow-up calls and emails very late, or do not respond at all. A reliable payer never does that.

But if you’re experiencing this regularly with a dental payer, it’s a red flag.

AR over 90 Days

The best practice is to keep AR very low, below 30 days. But when it ages beyond that, it means that you need to improve accounts receivable management in practice. 

When your practice has a high A/R over 90 days, it’s difficult to recover payments from outstanding balances. It also indicates that payments are stuck and revenue hasn’t been fully collected due to a huge number of claim denials, payment delays, underpayments, and large patient balances.

Look out for the payers who are denying your claims, paying less, or delaying payment, and mark them as risky.

Also, see which of your payers have your due payments stuck for more than 90 days, and identify them as high-risk.

Documentation Requirements for Routine Procedures

It’s obvious for payers to request supporting documentation for expensive and complex dental treatments, like bridges, crowns, dentures, implants, and SRP. It’s because payers want to control costs and don’t want to reimburse if they don’t deem a procedure necessary for the patient’s health. As a provider, you submit documents to prove their necessity and attach all the treatment, which is fair.

But when payers start requesting documentation for routine dental procedures, which aren’t complex or expensive, these are high-risk payers.

Example: A cleaning is a very simple process, which doesn’t require much documentation, as compared to an implant, which is expensive and risky. Payers need complete evidence for an implant to prove why the procedure is necessary for the patient and how it’s been diagnosed.

Documentation requirements are understandable for implants, but if a payer regularly requests documents for routine cleanings and fillings, these can be high-risk, as they increase administrative efforts and an unnecessary workload for your practice staff.

What are the Best Practices to Manage Risks and Secure Payments?

Let’s discuss some best practices through which you can manage risks and protect your revenue.

Conduct a Billing Audit

Invest in dental billing audit services to review and analyze all the financial aspects of your practice.

You can run a payer-wise analysis to see how much payers are reimbursing, what their denial patterns are, and how timely you’re receiving payments from the payers. You can conduct quarterly or monthly billing audits to know which payers are risky and how to manage them to prevent future denials and underpayments.

Audit also helps you find fresh outstanding balances sitting in A/R, which are easy to recover, instead of older ones, which may exceed the payer’s timely filing limit for claim submissions after a dental treatment.

Segment Payers by Risk Level

Create AR aging buckets to categorize risk and segment payers accordingly for a structured A/R management process.

You can do that by segmenting payers according to days in A/R. For example, A/R between:

• 0-30 days is low-risk
• 30-60 days is medium-risk
• 60-90 days is high-risk
• 90-120 days is a very high risk

Your practice management system helps you segment payers by AR and review payer scorecards that help track and evaluate each payer’s patterns on claim reimbursements and denials.

Using that data, your system generates AR aging reports, so you can see which payers have outstanding balances beyond 90 days or which payers have a higher claim denial rate.

Based on that, you can create a payer risk profile in your software or on a spreadsheet, which gives your billing team an idea of how to follow up with the payer to recover payments.

Verify Eligibility on Each Patient Visit

While upfront eligibility verification is a common practice, the better approach is to use real-time insurance eligibility verification services. It’s because Medicaid eligibility can change in a month, and commercial insurance plans may change their eligibility criteria every year.

Considering that, a patient’s eligibility and coverage status may not remain the same between initial scheduling/registration and the time of service. So, make sure to check the patient’s eligibility for a treatment on each visit. 

It reduces the risk of claim denials, as you submit accurate claims, if a patient is covered and eligible for the treatment.

Appeal for Every Claim Denial and Underpayment

Dental practices just write off claim denials and don’t follow up on them. They forget that denials can be managed and revenue can be collected with a proper denial management process.

By appealing every claim denial, you can protect the revenue loss. But don’t make it a reactive process. Take a proactive approach.

Start tracking your claim immediately after submitting it to the payer. Monitor its progress daily, so you’re prepared to act when you receive the explanation of benefits. Whether it shows a claim denial or an underpayment:

• Prepare an appeal
• Attach the supporting documents
• Resubmit the claim

Confirm if the payer has received your appeal request. Get the tracking number and follow up with the payer.

Build Payer-Specific Documentation Checklist

Each payer has its own criteria for documents to support each dental claim. Some may require billers to submit clinical narratives that completely describe a procedure, from the patient’s initial complaint and evaluation, to diagnosis and proposed treatment. Others may require ICD-10 codes on claim submissions for medically linked dental procedures.

Make sure to review each payer’s documentation requirements in their provider manual and create a list to make your internal billing process smooth. Your billers can view these documents and fulfill these requirements to submit clean and complete claims. It reduces the likelihood of claim denials, and even if the payers deny these, you have strong evidence to win appeals.

Outsource Dental RCM

Managing complex billing rules and identifying high-risk payers is difficult when your practice staff is occupied with multiple tasks, and you don’t have enough bandwidth to dedicate staff, specifically to find risky payers and implement best practices.

The solution is to partner with dental billing specialists, like TransDental, who manage your entire revenue cycle, from auditing high-risk payers to implementing strategies to reduce your accounts receivable and recover payments.

These billing experts assist with:

• Reconciling reimbursements against fee schedules
• Checking claim denial rates per payer and finding denial reasons
• Running payer-wise analysis to review payer patterns

These companies coordinate with insurance companies on your behalf, master their policies, and negotiate to resolve denial and underpayment issues. Plus, they make billing and recoveries smooth. 

So, you don’t have to worry about the financial side of your practice. Your RCM partners handle that for you and help maximize your collections, letting you focus your energy on caring for patients and restoring their precious smiles.

Final Thoughts

Identifying high-risk payers doesn’t mean dropping them from your network. It’s a part of your day-to-day billing process. But, it also doesn’t mean that you have to accept high denial rates, underpayments, and an increase in accounts receivable.

The best approach is to implement strategies for improved billing processes and contract terms. Also, review your claims and payments frequently by tracking their progress and monitoring them in real-time. And, build processes to manage each payer according to their requirements, and if that sounds complex, partner with RCM specialists, who know payers inside out, and manage payer-compliant billing for faster and complete claim reimbursements.

Frequently Asked Questions (FAQs)