Write Offs and Fee Schedules

Learn the difference between write-off adjustments and fee schedules and the advantages and disadvantages of each.

Updated 2/28/19

In my home state of Washington, a large dental insurance company slashed our filed fees by 15 percent recently. Several offices I work with have called me asking for advice on how to deal with it now that even the non-PPO plans are working under a much lower fee schedule. This article explains two approaches you can take when faced with this scenario. You can either apply adjustments (write-offs) or update your fee schedules in Dentrix. Both methods work well, but there are pros and cons to each, so you should choose carefully.

Using Adjustments (Write-offs)

Offices using the write-off system bill out the full fee for the procedure and then perform an adjustment (write-off) in the Total Insurance Payment dialog box of Dentrix Ledger to account for the difference between the office fee and what the contracted fee is with the insurance company. On their billing statements, patients see the full fee and also an adjustment showing how much money their dentist is losing by being a member of their PPO dental plan. Also, in the write-off system, the dental insurance companies are automatically billed the office’s higher fee, rather than the PPO fee, which can help when the insurance company later looks at how much of an increase should be made to the fee schedule.

I love this method! However, there is a disadvantage that you should consider. The Dentrix Treatment Planner is not able to account for that difference when you present the treatment plan. Your office team will be required to make hand-written adjustments to the treatment plan estimate, which may not look professional. Also, it may be challenging to collect on the day of service since the Ledger cannot accurately calculate the patient’s portion if the full fee is being posted to the Ledger. Even though this method requires some tricky work on the calculator, some offices still prefer to use this method.

Using Fee Schedules

Offices that work with multiple PPO plans should use fee schedules. With this method, the office team must keep the fee schedules current, update the coverage table accurately, and attach the fee schedule to the insurance plan properly.

When I discuss this method with team members, the most frequent comment I get is, “I want to bill my full fee to the insurance company, and that is why I have never switched to using fee schedules.” The good news is, with fee schedules, you can still bill full fees to the insurance company. All you have to do is change the claim format to the DX2007F when you are attaching the fee schedule to the insurance plan. I’ll show you how to do this in a moment.

There are three significant advantages of using fee schedules: (1) Collecting at time of service is accurate on the Ledger; (2) The treatment plan estimates are accurate, so you don’t have to do any manual calculating;(3) The production for the day will reflect the PPO adjusted production amount on your Daysheet. These are huge advantages for your team!

Let’s walk through it together so that you can start seeing those benefits sooner rather than later. After obtaining a copy of your fee schedule from the insurance company, in the Dentrix Office Manager, from the Maintenance menu, point to Practice Setup, and then Fee Schedule Setup to display the Fee Schedule Maintenance dialog box. Click New to set up a new fee schedule.

Give the fee schedule a name and select whether you want to start with a blank fee schedule, copy from an existing fee schedule, or import a fee schedule from an Excel file on your computer. Then select the position where the fee schedule will show up in your fee schedule list and click OK.

In the View/Edit Fee Schedule dialog box, find the first procedure code in the list where you need to make a fee schedule change, double-click the value under New AFTER, change the amount, and press Enter on the keyboard.

Make other fee changes as needed. When you’ve finished, click Save to create your fee schedule.

Now that your fee schedule is set up, you can attach it to the dental insurance plan using the Family File. To do this, after selecting a patient in the Family File, double-click the Primary Dental Insurance block. On the Dental Insurance tab, click Insurance Data to display the Primary Dental Insurance Plan Information dialog box.

Next to Fee Schedule, click the selection button and select the appropriate fee schedule for the plan (the fee schedule you just updated). Next to Last Update, you should also enter the current date so you have a record of the latest changes.

While you’re in this dialog box, if you want to bill your full fee to the insurance company, set the Claim Format to DX2007F. The F tells the Dentrix software to bill the fee schedule fee amount to the patient’s Ledger and the full fee to the insurance company.

When you use the DX2007F claim format, remember that you will be billing out full fees to the insurance companies. When you receive your EOB from the insurance company, it may look like you need to do an adjustment because the submitted amount will be greater than the allowed amount; but remember, the patient’s Ledger already has the correct PPO fees, so no adjustment should be necessary.

The final step in the setup is making sure the Coverage Table is accurate. When using fee schedules, do not use the Payment Table unless there is a specific procedure code that falls outside the fee schedule coverage percentage. (A good example of this exception would be the downgrade for posterior composites.) Using the Payment Table does cause the estimate calculations to be different.

If you are just switching over to using fee schedules and your patient has an existing treatment plan, you will need to use the Update Fees feature in the Treatment Planner in order for the treatment plan estimate to reflect the new fee structure. Once you’ve used the Update Fees feature, you can print the patient estimate just as you did before, but now it will reflect an accurate estimate without any manual calculations.

Using fee schedules when you are contracted with an insurance company will give you more accurate accounting of production, help your front office team collect more accurately on the day of service, and help give your patients an accurate treatment estimate when accepting treatment. This is a win-win for everyone!

Learn More

To learn more about adjustments, see the Adjusting Insurance Payments Automatically topic in the Dentrix Help.

For more tips designed for Dentrix Office Managers, subscribe to the Dentrix Office Manager blog at thedentrixofficemanager.blogspot.com.

By Dayna Johnson, Dentrix Certified Trainer

Dayna Johnson, founder and principal consultant of Rae Dental Management, helps dental offices improve patient care, increase collections, and reduce staff headaches by implementing efficient management systems. With 18 years experience in the business and technical side of dental offices, Dayna’s passion for efficient systems is grounded in both personal understanding and professional expertise. Dayna can be reached at dayna@raedentalmanagement.com or visit her website at www.raedentalmanagement.com.

Originally published in Dentrix Magazine, Spring 2012