6 Indicators that it’s Time to Outsource Dental Billing

by | Published on Oct 17, 2023 | Specialty Billing, Medical Outsourcing

Outsource Dental Billing
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Managing dental billing plays a vital role in the financial workflow of a dental practice, ensuring proper reimbursement from insurance for the services rendered. If you’re facing accounts receivable challenges, staffing problems, and a lower overall collection rate, it might be time to consider outsourced dental billing services.

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Signs that You Need to Outsource Dental Billing

Here are six indicators which suggest why your practice should consider partnering with a dental billing company:

  1. Delayed Payments

Accounts receivable is the outstanding amount owed by insurance companies or patients to the healthcare provider for services rendered. Collecting amounts that have been billed or accounts receivable is essential for successful revenue cycle management (RCM). “Days in A/R” denotes the average number of days it takes a practice to get paid or collect pending payments from both patients and insurance companies. Typically, insurance companies make payments within a 30-day time frame. The industry standard for AR days is 45, providing a 15-day buffer to accommodate claim processing. If this figure exceeds 45, it signifies an adverse impact on your cash flow, indicating that it is imperative to analyze the underlying reasons for the delay in collecting insurance reimbursements or patient payments.

  1. Decrease in Percentage of Clean Claims

Clean claims represent a straightforward metric-the average ratio of claims paid after the initial submission. These claims remain unaffected by the setbacks of denials or prolonged wait times in accounts receivable (A/R), and the benchmark for success is a rate of 95% or higher. If your facility’s clean claims rate falls below 85%, it signals deficiencies in your RCM strategy.

The clean claims rate directly reflects the efficiency of your team’s billing efforts. Consider a scenario where 1,000 claims are submitted, and only 800 are paid after the first submission. This implies that 200 claims require reworking, rebilling, recoding, and resubmission, leading to delayed payments and a potential increase in days in A/R. A lower percentage of clean claims means more time spent on reviewing denials, communicating with payers, and rectifying errors before the second claim submission.

If your clean claims percentage is suboptimal, it may be a compelling sign to reconsider and potentially outsource your dental billing to an expert.

  1. Diminishing Revenue

Dental practice revenue is influenced by various factors – billing and claim submission processes, insurance write-offs, patient care and service efficiency, practice fees and in-network fees, and marketing efforts. Optimizing these processes is critical to prevent a downturn in revenue. Comparing your revenue against industry benchmarks is crucial; if your facility falls below the industry average, outsourcing could be the key to optimizing revenue. As your practice grows, there comes a point where the billing process outgrows its in-house capabilities and becomes more cost-effective to outsource. Outsourcing can ensure a robust RCM strategy for operational success, leading to a reduction in operating costs in the long run.

  1. Rising Operational Costs

In-house dental billing extends beyond getting paid for services rendered. It includes critical operational expenses that are often overlooked by facilities. The following factors contribute to higher operational costs, affecting your facility’s financial viability:

  • Hiring certified billers and coders
  • Hourly wages, covering taxes and employee benefits
  • Licensing fees for software
  • Clearinghouse fees, statement fees, and postage
  • Scaling inefficiencies with a smaller billing department
  • Decline in collections and cash flow
  • Surge in patient debt

Inflation is driving up the operational expenses of running a dental practice, impacting everything from supplies to staff salaries. Employee turnover is impacted by various factors, from job satisfaction to compensation. Challenges intensify as practices struggle to attract and retain certified dental billers and coders. Shortages of qualified personnel leaves in-house billing departments understaffed, grappling with the demands of escalating accounts receivable (A/R), increasing denial rates, rectifying errors, and resubmitting claims. When you hire new staff, the associated costs of recruitment and training increases operational expenses.

Outsourcing your billing is more cost-effective and overcomes most of these challenges, leading to increased net collections and overall revenue.

  1. Challenging to Keep Pace with Regulatory Changes

Dental practices are impacted by changes in the healthcare industry, economic conditions, and regulatory requirements. They must comply with a range of regulatory requirements at the federal, state, and local levels. These requirements can be time-consuming and expensive to implement, but failure to comply can result in fines and other penalties.

Outsourcing billing can help you stay up to date, compliant, and competitive. Dental billing companies have certified professionals specialized in dental billing and coding. They consistently receive updates on new information from insurance payers and CMS. This ongoing information flow ensures their compliance, keeps them abreast of all regulations, and enables the submission of precise and error-free claims for your facility.

  1. High Write-off Percentage

The write-off percentage is a crucial metric that measures the proportion of money a healthcare provider has decided to write off as uncollectible. It is calculated by dividing the total amount of write-offs by the total charges for a specific period, usually a month or a year. The write-off percentage can offer insights into the financial health of your facility. If your practice is experiencing a high percentage of debt write-offs, it suggests you have challenges collecting payments from patients or insurance companies, impacting your cash flow and profitability adversely.

Outsourcing your dental billing can improve your write-off percentage and increase revenue. It will ensure a streamlined billing process and timely claim submission, avoiding missed deadlines and potential write-offs. By implementing a robust denial management process, your dedicated billing team will identify and resolve denied claims quickly, reducing write-offs due to denied claims. They will monitor this metric, identify the root causes of write-offs, and implement steps to reduce them, improving your net collection rate.

Reach Out to an Expert

With all the challenges and rules around coding, billing and collections, practices need to make sure they’re doing everything properly to ensure proper and timely reimbursement. Partnering with a competent dental billing company will ensure centralization and standardization of billing practices, lower operational cost, a decrease in billing mistakes, reduced denials, and improved compliance. With a team of certified billers and coders providing high quality services, you can focus on your patients.

While you may not be contemplating outsourcing your billing at the moment, it’s prudent to evaluate your current processes and staff’s strengths and weaknesses. This assessment will provide clarity regarding your alignment with industry best practices, ultimately empowering you to make informed decisions that serve your practice’s best interests.

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Amber Darst

Amber Darst is our Solutions Manager in the Healthcare Division, Practice and RCM. With a rich background in dental services, her expertise ranges from insurance coordination to office management.

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