Dealing with Dental Insurance Companies: Bewilderness to Clarity 3

Quantifying Insurance Reimbursements- Introduction

 Dental insurance reimbursements play a critical role in the financial health of a dental practice. While many practices focus heavily on clinical excellence and patient experience, the ability to accurately quantify and analyze insurance reimbursements often determines long-term sustainability and growth. Understanding how reimbursements are calculated, tracked, and optimized allows dental professionals to make data-driven decisions, improve cash flow, and negotiate more effectively with payers.

Understanding Dental Insurance Reimbursements

Dental insurance reimbursement refers to the amount paid by an insurance company to a dental practice for covered services rendered to insured patients. Unlike medical insurance, dental insurance typically operates with annual maximums, fee schedules, frequency limitations, and exclusions like missing tooth clausethat significantly affect reimbursement outcomes.

Reimbursements are influenced by several factors, including:

• Contracted fee schedules

• Procedure codes (CDT codes)

• Patient eligibility and benefits

• Deductibles, co-insurance, and annual maximums

• Claim submission accuracy and timeliness

Quantifying reimbursements requires moving beyond simple payment posting and adopting a systematic financial analysis approach.

Average Reimbursement per Procedure

Tracking reimbursement by CDT code reveals which services subsidize others.

Example:

Procedure	Fee (UCR)	Allowed (Contracted Rate)	Reimbursement %
D1110 Prophy	$120	$95	79%
D2740 Crown	$1,250	$820	66%
D8080 Ortho	$5,000	$2,500	50%

Many times, Insurance companies tend to reduce the contracted rates depending on an average price submitted per procedure. One of the most important levers that dentists must leverage is that you, as a dentist, are doing a favor to the insurance companies by being in-network with them, which helps insurance companies to market their policies against other competitors. There must be a dedicated negotiator who keeps that doctor's networks in-check all the times, maintains re-credentialing timelines and uses market rates and inflation as part of getting increased reimbursements.

In the last decade or so, we have witnessed consolidation of insurance companies in all healthcare fields and hence unification of dentists is very much required to prevent undue advantage by any insurance companies. According to one article by American Medical Association, they have highlighted this very fact and emphasized on the importance of challenging the bigger consolidation of insurance companies.

Contract Evaluation and Negotiation Using Data

Insurance carriers respond to data-backed negotiations.

Effective leverage includes:

• Demonstrated patient volume

• Below-market reimbursement comparisons

• High claim acceptance rates

• Geographic demand

• Comparision with reimbursement from other payors and median cost per procedure

  
  

Example:A practice presenting a report showing reimbursement rates 12% below regional averages successfully negotiates a fee increase on only 15 high-volume CDT codes, resulting in a $48,000 annual revenue lift. (You do not need a fee increase for all the codes, yet loosing on underutilized codes against against gaining on more commonly used codes can also help)

Insurance Days in Accounts Receivable (A/R) (Days of Outstanding Sales)

In the days when EBIDTA is the most important KPI for many leaders, Days of Outstanding Sales often is one of the most important indicator of how your daily processes are working and if they are failing or not.

What is “Days of Outstanding Sales”? - Days sales outstanding (DSO) measures how quickly a company collects payment following a credit sale.

DSO= (Accounts Receivable/Total Credit Sales)​×Number of Days​

Industry Standard:

• Optimal insurance A/R: ≤37.2 days.

  
  

Example:A practice with $150,000 in insurance A/R and an average reimbursement delay of 52 days experiences chronic cash flow strain, even with strong production.

Payer Mix Analysis and Financial Impact

Payer mix refers to the proportion of revenue derived from:

• PPO insurance

• Fee-for-service patients (Cash Patients)

• Government or discount plans

Case Example:Two practices produce $80,000 per month.

Practice	PPO Mix		Monthly Collections
A	80% PPO		$49,600
B	40% PPO		$62,400

We always learn that Care Per Visit is a very important KPI for a dentist as well as their treatment coordinator to measure success of how many paitents accept treatment and same day treatment is being performed for them. For instance, in the example above - Office A and Office B both see 500 patients and did similar treatments - Practice B collects $12,800 more per month, or over $150,000 annually.

Revenue Leakage: Quantifying the Invisible Loss

Revenue leakage is the gap between what should be collected and what actually is.

Common Sources:

• Missed billable procedures

• Incorrect CDT coding

• Unposted downgrades

• Unfollowed denials

• Coordination of benefits errors

Fact:Industry audits show that 3–7% of total production is commonly lost to preventable revenue leakage.

Example:A $1.2M practice losing 5% annually forfeits $60,000 without realizing it.

Retrived from : https://elion.health/resources/ai-denials-management-buyers-guide

Data Integrity and Reporting Infrastructure

Effective quantification depends on clean data:

• Accurate fee schedules loaded by plan

• Correct adjustment codes (contractual vs. financial)

• Timely and precise payment posting

• Standardized reporting periods

  
  

Recommended reports include:

• Insurance Aging by Carrier

• Adjustments Summary

• Production vs. Collections

• Procedure-Level Profitability

• Payer Performance Comparison

  
  

Strategic Applications of Reimbursement Quantification

Once quantified, reimbursement data supports decisions such as:

• Dropping low-performing plans

• Restructuring fee schedules

• Expanding membership plans

• Hiring or outsourcing revenue cycle expertise

• Transitioning toward hybrid or FFS models

Quantification shifts decision-making from emotional to financial.

Conclusion

Dental insurance reimbursement quantification is no longer a back-office function—it is a strategic imperative. Practices that measure, analyze, and act on reimbursement data gain control over revenue, reduce dependency on low-paying plans, and build sustainable financial models.

In an environment of rising overhead and stagnant insurance benefits, the practices that thrive will be those that treat reimbursement as a measurable asset—not an unavoidable compromise.

Further Reads:

1. How Health Insurance Consolidation hurts patients

2. NYTimes: Big insurers shift blame for high healthcare costs

3. Office, A. (2025, September 24). Health Care is Becoming More Consolidated—Including Physicians. What Effect Is It Having?Gao.gov. https://www.gao.gov/blog/health-care-becoming-more-consolidated-including-physicians.-what-effect-it-having