Dental plans moving to direct deposit claim payments

By Greg Alterton, dental benefit plan specialist

A memorable case of mine in assisting dental offices in payment problems was one where the office had submitted a claim to an out-of-state dental plan and the plan denied it because it was filled out by hand. We contacted the state insurance commissioner's office to ask whether state law defines what constitutes a valid claim. In other words, did the fact that a dental claim had been written by hand make it an invalid claim? The answer was no, a claim prepared by hand, if legible, would be considered valid. When told that a dental plan in their state had rejected a claim from a California dentist simply because it was prepared by hand, the insurance commissioner's office contacted the plan and prevailed upon them to process the claim, which was paid.

In reporting this to the dental office, I asked in passing why they prepare their claims by hand. The billing manager said, "Oh, we don't have a computer in our office. We don't even have a typewriter." What works, works. But filling out claims by hand begs the question: How prepared will a dental practice be in doing business in the "information age" if they conduct their business with only a pen in hand?

Interestingly, the dental plan industry reports that more than 70 percent of dental claims received by plans are sent electronically. In California, that number is closer to 75 percent. Practice management software, and the standardization of forms for electronic transactions, have made this possible. The advantages of electronic transactions have also made the major transactions between dental practices and dental plans electronic.

Through electronic claims submissions, dental offices get a receipt of claims sent and can receive rapid notification of plans' receipt of claims, the status of claims being processed and eventual payment. Most claims are now auto-adjudicated, which means faster processing of simple claims, resulting in fewer rejections and less back-and-forth between the plan and the dental office to acquire needed documentation. Not only do electronic claims also save staff time on filing and tracking claims, but they also save the practice in postage.

Another technological wonder of the electronic age is upon us, and admittedly is causing some nervousness. That is the electronic transfer of claim payments through electronic fund transfers (EFT) by means of direct deposit into the accounts of dental practices.

Because of HIPAA requirements, all dental plans have the means to receive claim payments through electronic submission. They also have developed the means to pay claims electronically. Ten years ago, one dental plan established a system whereby any complete claim submitted electronically by the end of business of a particular day would be paid through automatic deposit into the dental practice's bank account by midnight that night. So, EFT as a means of payment isn't new. What's new is that dental plans are starting to shift to EFT/direct deposits as the preferred method of payment: no more physical checks and payments made directly to practice accounts.

Most dental plans desire to use EFT to pay for claims they have received. There are advantages for both the plan and the dental practice. For the dentist, plans are touting these advantages:  payments received faster, in days rather than weeks; same-day access by the dental practice to funds deposited; online documentation available to reconcile payments; payments made directly to a practice's account —eliminating the need to run to a bank to make deposits and reducing the number of mistakes that might occur while making the deposit. With direct deposits, the potential of a breach of HIPAA requirements on patient confidentiality or breach of security of a patient's record is not a concern, or is certainly of less concern. One problem that CDA hears on a regular basis – that of a check lost in the mail sent to a wrong address – will be resolved through EFT/direct deposits. Any office that has gone through having to correct a check being sent to the wrong address or being lost in the mail knows that this can take a considerable amount of time to rectify.

Despite the reasons on the plus-side for of accepting EFT/direct deposits of payments, some concerns have been raised by dentists. Some providers are not wanting to disclose their bank account information; a concern about not being able to tie a claim to a payment; and the inability to decipher a bulk payment. CDA has been assured by a dental director with a major plan in California that these concerns are dealt with through safeguards built into the process. For example, explanation of benefits (EOB) forms are available on plans' websites and are easily retrieved. Dental offices are encouraged to speak with representatives of plans who approach them about converting to EFT payment to discuss any concerns the practice may have. At this stage, if a plan is moving to EFT/direct deposit, oftentimes it will allow practices to opt out and continue to receive paper checks in the mail.

Another expressed concern is that for some plans, a dentist not participating in the direct deposit payment method may receive a virtual credit card (VCC) in lieu of a paper check. This becomes problematic in that, like a credit card, there is a processing fee for drawing on the card. It's important to know that plans that use VCCs to pay on claims will instead allow the EFT/direct deposit method or will allow a dental practice to opt out of receiving the VCC in favor of continuing to be paid by check. However, it should also be known that some payers may begin to pay via a VCC as a default, particularly if a practice doesn't enroll in EFT/direct deposit. This isn't a current policy, but it may be a coming thing. A specific request to opt out and to receive a physical check may have to be made to avoid receiving a VCC. From what CDA has heard from dental plans, EFT/direct deposit comes with no cost.

One of the first plans to switch to EFT/direct deposit or VCC is Aetna. Aetna comments that this move for its dental plan is being driven by the medical plan side of its company, and its desired compliance with all privacy laws and protection against potential breaches of those laws.   

While other dental plans are not moving to EFT/direct deposit as the primary payment method, it is clear that the industry is moving in that direction. One dental plan representative told CDA, "We are following the lead of other carriers in the industry. Our expectation is that there will be a day sometime in the future where the industry is paperless in regard to claims and reimbursements, and establishing an EFT ability for payments is our first step toward that reality. We know that there are offices out there that are not yet technologically set up to accommodate EFT. In these cases, we will not require the office to enroll in EFT, thus they can opt out." 

Another dental plan confirmed with CDA that it had enabled EFT/direct deposit as an option in 2014.

"To date, we have not required direct deposit and it remains elective for our dental healthcare practitioners. We've elected not to enable virtual payments (credit/debit cards) for dental offices that elect not to participate in EFT and choose to stay on paper checks," a representative said. 

It's safe to say that all dental plans have established a system of making claim payments through EFTs, and while only one plan has made this the means of making payments, all plans are likely moving in that direction. While for most plans use of EFT/direct deposits is voluntary on the part of the dental practice, it is an emerging trend. Having the capability to accept EFTs from plans and understanding the benefits and the safeguards to practices in participating in EFT/direct deposits will alleviate concerns with any future transition and will reduce potential problems.

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