Payer Policy Rules and their Impact on Dental Billing

It is a well-known fact that claim denials eat up a dental practice’s revenue, accounting for thousands of dollars in losses but few speak about what causes them! A key reason is that billing staff struggles to submit dental claims which comply with payer policy rules.

Sometimes, they’re confused while handling claims of multiple insurers, because each insurer decides the CDT codes it accepts (insurer might bundle codes for initial checkups or diagnosis into a single code), procedures it reimburses, and documents it requires for each claim. And insurers can change their policies anytime, which staff may miss due to busy schedules and workload.

As a result, practices experience claim denials and revenue losses. Sounds troubling? No worries!

We’ll guide you through payer policy rules with best practices to follow them for smooth and compliant dental billing services.

What are Payer Policy Rules?

Payer policy rules are requirements by a payer to approve a dental claim. Each insurer and state program sets its own policies for claim submissions, which billing staff must follow.

For example, the state of California has different Medicaid dental policies than the state of Texas. 

And just like that, commercial payers have different policies, which also vary by state. Delta Dental’s policies may be different from Cigna or Aetna. And even Delta Dental’s policies may not be the same in each state.

If you’re wondering why state policies are different for each state, we’ll explain it in the following section.

Why are Payer Policy Rules Different for States?

As we’ve discussed, each state sets its own insurance rules for:

• Offering coverage
• Requiring pre-authorization for certain treatments
• Setting reimbursement rates
• Designing patient’s insurance plans

Medicaid or Medicare dental care has different policies in each state. The same is the case with commercial insurance companies, like Aetna, Blue Cross Blue Shield, or Humana, who adapt to each state’s rules. So, if you check BCBS rules in Texas, you’ll find them different from BCBS dental policies in Florida.

Want to know how states or commercial payers design these rules? They consider the following aspects:

State Population and Economy

Payers can consider the number of people living in a state and their annual income to determine benefits and reimbursement rates in insurance policies and patients’ coverage plans.

Here, an important thing to note is that Medicaid and commercial payer policy rules can vary. 

The state-run Medicaid program aims to provide assistance to patients who can’t afford expensive treatments, so it may offer higher reimbursement rates in rural areas and lower rates in urban areas, as rural areas have lower income patients.

But, commercial payers can offer more benefits with higher reimbursement rates in a state which has a stable economy and higher budgets for dental insurance. The number of employers is also important here, as top companies buy insurance plans in bulk and negotiate better rates for their staff. They have a higher number of employees with higher income levels, which makes it easy for them to share costs. With that, insurance policies sponsored by employers can offer more benefits for their insured employees in commercial dental plans.

Example: A Delta Dental PPO plan in the urban state of California charges a higher maximum, which begins at $32.75 per month, than the PPO plan of Mississippi, which begins at $19.90 per month. 

Since the California plan has a higher fee, it offers more benefits than the Mississippi plan. For instance, the premium plan in California has a 6-month waiting period for major procedures, while Mississippi’s premium plan has a 1-year waiting period.

The state economy plays a major role here, as California residents earn a lot more on average than people in Mississippi. California average income is about $100K per household compared to $59K in Mississippi. It’s a key reason that California-based insured members get more benefits in a commercial plan, as they can participate more in cost-sharing.

Public Health Needs

The oral health needs of a state’s population impact their payer policy rules. If more patients visit practices for dental checkups and treatments, a state offers policies and benefits to make care easier and affordable for them. However, in a state, where less patients show up for treatments, policies may be limited. 

Policymaking also depends on the type of patients’ complaints and treatments in a state.

Example: In Minnesota, about 69% of adults over 18 get a dental visit per year, which indicates that patients visit practices for dental procedures very often, due to which the state’s policies may focus more on routine dental services than emergency visits. 

However, in a state like Alabama, where routine visits are rare and most patients visit practices only for dental emergencies, policies may focus more on cleaning, exams, sealants, and other preventive services to prevent these emergencies.

Number of Dentists

Rural states have lower patient volume and shortage of dentists than urban states, due to which they have lower competition. In these states, state plans and commercial insurers try their best to attract dentists with relaxation in policies and higher reimbursement rates.

Example: Mississippi, which has more than half of the population living in rural areas, has higher reimbursement rates on dental procedures than urban California. For D0120 (periodic oral evaluation), Mississippi Medicaid’s fee schedule offers the standard reimbursement fee of $31.42, which is higher than California’s fee schedule, which offers the allowed maximum of $15.00.

Types of Payer Plans in Dental Billing

In dental billing, you need to follow payer policy rules according to the payer plan type.

Medicaid and Medicare Plans

Medicaid and Medicare are state-run insurance plans, in which each state sets its own rules for reimbursing claims and accepting dental procedures. 

Medicaid offers more options for claims for pediatric dental care or pregnant patients, and has some restrictions on adult dental care. But these restrictions vary by each state’s plan.

In Medicare, patients mostly receive treatment for procedures that are linked to a medical condition. It doesn’t mostly cover routine dental procedures like cleanings, fillings, dentures, and implants. 

Medicare may cover oral surgery-related procedures like:

• Tooth extraction before radiation or organ transplant
• Jaw surgery to treat fractures, tumors, or infections
• Oral surgery performed during a covered hospital stay

But these policies vary by each state.

PPO Plan

In a PPO (Preferred Provider Organizations) plan, your providers enroll with insurance companies in their network. As in-network providers, you’ve to see patients according to the fees set with companies in the contract, but you also get discounts and coverage percentage. 

However, the fees you set in the plan is lesser than your UCR (usual and customary) fee, and you must accept insurers’ contracted fee to see insured patients.

HMO Plan

In a dental HMO (Health Maintenance Organization) plan, patients must choose a primary care dentist and get referrals for specialty care. In this plan, insurers pay dentists a fixed monthly fee on seeing assigned patients, regardless of the service provided.

HMO payer policy rules have limitations on covered services and have stricter policies on prior authorization for many procedures than PPO plans. In HMO plans, patients have lower out-of-pocket costs and zero or less deductibles.

Indemnity Plan

Indemnity plans are rare as compared to PPO and HMO plans. In these plans, patients can see any dentist and these plans reimburse claims on a percentage of the dentist’s UCR fees. While these plans are flexible, these offer lower annual maximums than PPO plans and require patients to share higher costs.

How to Find Payer Policy Rules?

You can easily find payer policy rules on a state Medicaid or a commercial insurance company’s manual. These manuals are available on their official websites, where they list down their rules for reimbursing dental claims. 

You can also find their official fee schedules, so you get an idea of which insurance plan can benefit your practice in the state.

Key Components of Dental Payer Policy Rules

Let’s review the rules which Medicaid or commercial payers set. And as we’ve discussed, these rules can vary for each payer and state plan.

Covered Services

Each state’s Medicaid plan and commercial payer determines the dental services for which they want to pay. They publish lists of covered procedures and accepted CDT codes for it in their official manuals, which you can view and download, to get an idea of what they’ll reimburse.

These manuals also let you know which services aren’t covered by insurers. For example, when a payer doesn’t cover a service, they define it as “not a benefit” in their fee schedule. A patient has to pay complete charges for a non-covered service.

Benefits and Limitations

Medicaid plans and payers provide their complete list of procedures with available benefits and limitations. 

For example, a commercial PPO plan defines its provided benefits for certain procedures in its certificate of coverage. It covers 100% of preventive and diagnostic services, 80% of basic dental procedures, and 50% major services after waiting periods. This plan doesn’t cover orthodontics and the annual maximum coverage is $1500.

This is the standard of what a payer pays in each plan. But, still, every patient’s coverage plan may be different, depending on their age, health, income, and other factors. You can check what insurance covers with real-time insurance eligibility verification.

You can also check the number of times a patient can get a treatment. A patient’s plan may avail two cleanings per year, and if the patient wants a third cleaning within the year, insurance doesn’t cover it and the patient has to pay for that.

Waiting Periods

Waiting period is a duration in a patient’s coverage plan, during which dental services aren’t covered, and a patient must pay during that time. For example, if a patient has a 12-month waiting period for crowns, you can’t bill claims for that treatment within that year. Patients must pay for the treatment costs until the waiting period expires.

Patient Responsibilities

When you check benefits and limitations in a patient’s coverage plan, it also helps you know patient responsibilities. These are expenses which an insured member shares in a plan. The responsibilities include:

Network Rules

Insurance has different reimbursement rates for in-network and out-of-network providers. In-network providers or practices are enrolled with an insurance company, while out-of-network providers aren’t part of their network.

In PPO plans, patients can visit any dentist, whether they are a part of the network or out-of-network. For in-network patients, fees are lower, as practices accept rates set in insurance contracts. But for out-of-network patients, fees are higher, as they’re not a part of the insurance network, and can charge in full.

So, insurers reimburse rates according to the provider’s network status. Treatment rates are mostly higher for in-network providers, while out-of-network providers are paid just a limited amount, and a patient has to cover the rest.

Required Documents

Insurers require documents for dental procedures, which provide them with each and every detail of a treatment. Documents are a solid proof for practices. Common documents which payers require are dental radiographs, intraoral photos, narratives, periodontal charts, and clinical notes. 

These can be specific for some procedures, such as extractions, for which insurers may require:

• X-rays showing proof of fracture in a tooth
• Clinical notes which explain why a procedure is surgical
• Narrative which explains its medical necessity

Each insurer and state plan has their own list of required documents, which you must attach with the claim form for approval.

Coordination of Benefits

Coordination of Benefits is a process of arranging insurance claims in the correct order when a patient has multiple coverage plans. Payers determine primary coverage and secondary coverage by setting their own rules.

For example, if a Medicaid-insured plan is enrolled in another coverage, the other plan must pay first and Medicaid pays next.

And in commercial plans, the most common COB rule is employee versus dependent. In this rule, a policyholder is enrolled in two plans. In one plan, the policyholder has coverage provided by their employer, while in the second plan, the individual is someone’s dependent. In that case, the employer’s plan pays first.

Another rule is the Birthday Rule, in which a child’s primary insurance is determined by the birthdays of their parents. If a mother’s birthday comes first in the calendar, her insurance pays first and the father’s coverage pays next.

Prior Authorization

Some dental procedures, like crowns, bridges, and dentures, are complex and expensive, due to which insurers set pre-authorization requirements to control costs. 

To submit claims for these procedures, first seek prior authorization by the insurer. Send a pre-authorization request by writing a letter and attaching the required documents, such as clinical notes and radiographs. It proves why you need to perform the procedure.

If billers send a claim before requesting pre-authorization and getting approval, payers deny it.

So, it’s important to get pre-authorization for certain procedures. Check payer manuals before submitting any request.

How Do Payer Policy Rules Impact Dental Billing and Coding?

Payer policy rules are very important in the dental billing and coding process, because if you don’t follow their rules to submit a claim, your claim gets rejected.

So, when you’re submitting a claim, make sure you:

• Add all of their required details
• Attach payer’s required documents for a dental procedure
• Use the CDT codes accepted by payer for reimbursements

And the most important step! Send these claims soon after you perform a dental procedure. The reason is that insurers set deadlines to submit claims after you perform a service. For example, if you treat a dental patient for a SRP, submit the claim within your insurers’ time limit, whether they require you to submit a claim within 30 days or 60 days.

It ensures your claims get approved and you get paid in full for dental services rendered.

And when you’re appealing for denied or underpaid claims:

• Write appeal letters with proper reasoning
• Attach your payers’ required documents to justify your appeal
• Send appeals to payer email according to their guidelines

How to Stay Compliant with Changing Payer Policy Rules?

Payer policy rules can change any time and billing staff may find it challenging to keep up with them.

Here are a few ways through which you can stay updated with the payer policy rules:

Organize a List of Payer Policy Rules

Create a list of payer policies for all the insurance companies you work with. Bookmark the policy pages on each payer portal and check them every two to three months for updates. Insurers may also notify you about policy changes via email, so your staff updates billing processes according to that.

Follow ADA’s Coding Updates

ADA keeps on changing the CDT codes each year, adding new codes, modifying existing codes, and deleting outdated codes. It’s important to follow ADA’s annual updates, so your staff can select the right codes for each procedure while billing claims. Also see the codes which your payers accept for reimbursement. It makes your dental coding accurate for claim submissions.

Develop Relationships with Insurance Representatives

Building strong relations with insurance company representatives helps a lot. These representatives update you about policy changes. You may also contact them before submitting an insurance claim to check policy updates or get assistance on complex claims.

Create Checklists for Each Procedure

For some common procedures, create checklists in which you list down each payer’s specific requirements for documentation. If your staff is familiar with Delta Dental and Cigna’s documentation needs for a crown, it’s easy for them to submit the right documents according to the payer and comply with them.

Attend Regular Training Sessions

Most insurance companies offer free webinars and training sessions on their policies and billing requirements. Your billing staff should attend these sessions or stay in touch with insurance representatives to learn and adapt to new rules.

Automate Billing Processes

If you integrate your existing system with insurers’ provided payer portal, your dental billing software can easily learn these rules. The system automatically verifies insurance eligibility, scrubs claims for errors, and submits clean claims, by complying with payer policies.

Automation also helps with tracking claim status and sending appeals if claims are underpaid or denied.

Outsource Your Billing

Outsourcing your billing is an effective approach to comply with payer policy rules. After all, keeping up with changes in these policies and training staff to learn them consumes your staff’s time and can be very stressful for them.

If you outsource your billing, you not just save your costs, but also make sure that your claims are clean and complete for dental billing compliance.

Top billing companies, like TransDental, have experience of working with dental practices and top insurers over the years, and know how to send claims according to each insurer’s policies. It saves your staff’s time spent in learning new claims, and ensures you’re paid fairly for dental services.

Conclusion

Following payer policy rules is important to submit clean claims, get faster reimbursements, and protect your practice revenue. So, learn new policies and start billing claims according to these rules. And if your staff finds it challenging, outsourcing your billing is the best option to stay compliant.

Frequently Asked Questions (FAQs)