Suppose you treat a patient at your dental practice and submit a claim to start waiting for the reimbursement. But you don’t receive it and find that the claim has been denied in the explanation of benefits, as the payer doesn’t cover it.
You then communicate with the patient and ask them to pay the charges, which leads to patient frustration and disputes. A negative patient experience also damages your practice’s reputation.
Feeling worried?
Well, you can prevent the financial and reputational risk if you estimate patient financial responsibility on time.
But, you need proper guidance, along with the right dental RCM solutions for providers, to calculate the patient’s responsibility with accurate estimates.
So, let’s explore the entire process with best practices to improve patient experience and maximize collections from unpaid patient bills.
What is a Patient Financial Responsibility in Dental RCM?
Patient financial responsibility means the treatment costs that a patient has to cover. In a dental revenue cycle, it means that the patient has to pay for some expenses that the payer doesn’t cover in the plan.
Some of these include:
- Coinsurance: The patient’s share of the total treatment costs, which is a small percentage (e.g., 20% of the total amount).
- Copay: The fixed amount that the patient must pay for specific services, like checkups, on time
- Deductible: The fixed amount that the patient pays to activate the coverage for insurance services for the rest of the year
- Non-covered services: The payer doesn’t reimburse the amount for these services. A patient must pay the dentist’s fee to receive any of the dental services.
- Coverage exceeding annual maximum: If the treatment charges exceed the payer’s annual maximum for the coverage, the allowed amount for a procedure, or frequency limitations on certain procedures, the patient must pay for the remaining costs out-of-pocket.
It’s important to receive these payments from the patient upfront. In case of coinsurance, charges may change when you receive an explanation of benefits after claim submission. The EOB may highlight the patient’s responsibility, which you need to cover afterwards.
How to Estimate Patient Financial Responsibility?
Let’s discuss the complete process of estimating patient financial responsibility in easy-to-understand steps.
Verify Patient Insurance Eligibility
When you use real-time insurance eligibility verification services to check if a patient’s plan is active, you can find all the benefits and costs in it. It helps you understand the treatment costs the payer covers and the share of these expenses the patient must pay. Patients are required to pay deductibles, copays, or coinsurance.
Timely verification of details helps you know what the patient must pay so that you can charge them at the counter. But that’s just the beginning. There are more steps involved in the process of estimating patient charges.
Determine Procedure Fees
First, determine the procedure fee. If the patient is covered by insurance and you’re an in-network provider, you’ll charge the fee according to the contracted fee schedule.
Suppose a patient visits you for a root canal treatment. You normally charge $1200 for the procedure, but when you enroll in the payer’s network, you write off $300 as a contractual adjustment and accept the remaining $900 as the fee. In this case, when you’re seeing an insured patient, $900 is the procedure fee.
Apply Deductible
Now, when you verify the patient’s coverage, you see that $50 is the deductible in the patient’s plan. You apply the deductible after determining the procedure fee. It subtracts the $50 deductible from the total allowed amount of $900. Then, the remaining amount is $850.
Calculate Copay and Coinsurance
Now, you have to calculate the copay if it applies to the patient’s plan. If the patient has a fixed copay of $50 per visit, it’s subtracted from the billable amount, which now remains at $800.
And when you find a 30% coinsurance on the patient’s plan through benefits and coverage validation, you calculate it on the remaining amount of $800. 30% of $800 is $240, which adds to the dental patient cost estimate. The remaining billable amount is $560.
Check Annual Maximum
Check the payer’s annual maximum on the patient’s coverage plan. If the billable amount is less than the annual maximum, it’s covered in it, but if the amount exceeds the annual maximum, it’s added to the patient’s responsibility.
Normally, insurance companies allow an annual maximum of $1000 to $2000 on insurance plans. There may be exceptions, where the annual maximum may be higher if the patient subscribes to an insurance plan with higher premiums.
If we take the above example, let’s suppose that the annual maximum is $1000 in the patient’s coverage. The remaining billable amount is $560. It’s less than the annual maximum, so it’s covered in the plan. When the payer reimburses $560, it’s deducted from the $1000 annual maximum. After that, the patient has $440 left to use throughout the year.
Calculate the Final Estimate
Now, after you’ve applied the deductible, calculated the copay and coinsurance, and checked the annual maximum, it’s time to calculate the final estimate.
You can calculate the dental patient cost estimate with this simple formula. Add all the patient’s costs, like deductibles, copays, coinsurance, and any remaining amount after the payer has covered the annual maximum.
If we use the above example, you add the $50 deductible, $50 copay, $240 coinsurance, and the $160 amount left after the payer has covered the annual maximum. When you total them, the amount is $500, which the patient has to pay.
How to Get Accurate Patient Responsibility Estimates?
Humans are prone to errors. And manual calculations may not give an accurate dental treatment cost breakdown.
The entire patient responsibility estimation can go wrong. But with a proactive approach, you can correct this step in a front-end revenue cycle process.
So, automate the process by using an all-in-one practice management system, which manages all your practice and revenue cycle tasks at the same time.
The modern system automatically calculates deductibles, copays, coinsurances, and any amount remaining after annual maximums.
It calculates a patient’s estimate, based on all the aspects of a patient’s coverage, like insurance fee schedules, patients’ coverage benefits, claim history, remaining maximums on the plan, and the coordination of benefits.
After a complete calculation, the system provides a financial responsibility estimate, which you can communicate to the patient for patient billing.
Is Patient Responsibility Estimate the Final Payment?
It’s important to clear the confusion between the dental pre-treatment cost estimate and the final amount billed to the patient. The estimate is just an initial calculation, which may change when the payer sends the EOB after claim adjudication.
If the final patient responsibility on the EOB is different than the initial estimate, you must bill the patient for that and recover payments.
But it can be a worrying situation. It may lead to a negative patient experience and billing disputes with the patient. The patient gets frustrated due to the miscommunication.
The best way is to provide pre-treatment written estimates to the patient and clearly tell them it’s just an estimate and not the final amount, which may change after claim settlement.
When patients know this in advance, it’s easy for them to plan their budgets and decide whether they want to proceed with the treatment.
It also builds trust between you and the patient, and you’re likely to retain the patient. In fact, positive word-of-mouth can also help you acquire new patients.
Optimize Your Front Office Management
Some front-end staff can get confused or worried when they try to explain patient charges. But it’s important to clearly communicate the charges on time.
If your staff doesn’t feel confident doing so, you can partner with outsourcing companies like TransDental, which manages your complete dental RCM.
The company offers specialized front office management services for dental practices, according to their practice size and operations.
The purpose of using these services is to assist them with effective patient communication.
Front-end partners combine automation with staff expertise for complete front-end support on scheduling patient appointments, estimating financial responsibility, and communicating the costs to the patient.
It relieves a receptionist of the stress of handling patients. The front-end experts do that for you, so you can focus on your day-to-day practice tasks and help restore bright smiles!
Final Thoughts
It’s important to get accurate patient financial responsibility estimates, so you can empower patients to make the right decisions that match their budget and needs. Calculate it the right way by using automated software or outsourcing estimation to a partner who provides custom front office management for your practice needs. The purpose is to restore patients’ smiles and keep a happy practice.
Frequently Asked Questions (FAQs)
How to check patient financial responsibility in dental insurance?
You can check patient financial responsibility via insurance eligibility verification. With this process, you know the insurance-covered treatment costs and the patient responsibilities, such as copays, coinsurance, deductibles, and non-covered services.
How to calculate patient financial responsibility?
The simplest formula to calculate patient financial responsibility is to add coinsurance, copays, deductibles, non-covered services (if applicable), or any remaining amount (if annual maximums have been exhausted).
What is the most effective way to calculate patient financial responsibility?
Use a robust billing software or a practice management system to automate patient financial estimation. The software makes all the calculations by using the patient’s insurance claim-related information for accurate estimates.
How can practice staff confidently discuss treatment costs with the patients?
TransDental offers professional front office management services to effectively manage patient communication with a clear and upfront discussion about costs to encourage patient retention.
