Stay Out of Trouble with Discounts and Credits

One of the fundamental concepts about dental insurance billing is often missed by practices, and even though the oversights are typically innocent in nature, the consequences can be significant.

The fundamental concept is to bill an insurance company for the actual cost of dental treatment.  Sounds simple enough.  But what if you offer the patient a five percent discount for paying at the time of service?  What do you bill to the insurance company?  The cost of treatment is the full cost for dental services minus the five percent discount, and that is what you bill.

Yes, the insurance company receives the discount as well.  You cannot selectively apply the discount to patients and not extend the discount to the insurance company.

What if, for example, you offer a $100 courtesy credit to a patient who is doing a substantial amount of dental treatment?  Many practices lower the patient’s out-of-pocket costs by $100 while still billing the insurance company for the full price.  Instead, you need to bill the insurance company for the cost of dental treatment minus the $100 credit—that is the true cost of treatment.  Again, you cannot selectively apply the discount to just the patient.

What are the consequences for ignoring the rules?  You may find yourself in violation of state laws and/or participating provider contracts.  Depending on the case, you could be accused of overbilling insurance companies or of fraudulent billing practices.  These are serious matters.

The best course of action is to always bill insurance companies for the true cost of dental treatment.  Apply the rules correctly and you will stay out of trouble with discounts and credits.

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