More than money: Weighing the risks and benefits of patient refunds

July 17, 2023
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Offering refunds to dental patients, when appropriate, can be a reasonable business decision that may improve patient satisfaction, build trust and promote positive word-of-mouth marketing.

The Dentists Insurance Company’s Risk Management Advice Line assists TDIC policyholders and dental association members with concerns that arise during the practice day. Dentists frequently reach out to the Advice Line with questions about offering treatment refunds or discounts. Here are a few of those calls that illustrate common challenges and risks associated with refunds.

Case Study 1: Prepaid Treatment

A dentist had been treating an elderly patient who needed two implant-supported crowns. The patient paid the full treatment fee at the initiation of treatment. Unfortunately, before her new crowns were delivered, the office learned that the patient fell at home and sustained a serious injury. A few weeks later, the patient’s daughter contacted the office, letting them know the patient was unable to resume her dental care as she was now receiving hospice care and requested a refund of the money that was prepaid for her mother’s treatment.

Given that the restorations had already been fabricated and the cost of associated lab fees had been paid, the dentist was unsure of her obligation and called TDIC’s Advice Line for direction. The analyst cautioned the dentist that the priority in this situation would be ensuring compliance with HIPAA privacy laws. She instructed the dentist that before engaging in any further discussions with the patient’s daughter, the dentist must verify that the patient’s record contained an authorization listing the daughter as a representative. If not, that authorization needed to be obtained before communicating further with the daughter.

The analyst also advised the dentist that while it might be tempting to argue that the custom-made crowns resulted in lab fees that couldn’t be recovered, the patient’s representative would likely not be swayed by this argument. Considering the difficult and sympathetic position of a patient in hospice care, the analyst suggested that it might be in the best interest of both patient and practice to consider refunding for the incomplete treatment. 

Case Study 2: Potential Overcharges

A dentist had been treating an elderly patient whose son had power of attorney to manage his father’s health care and finances. At the time of treatment, the patient made a cash payment on a portion of the account, and the son paid the remainder with a credit card. Following treatment, the patient’s dental benefits plan paid more than expected.

Upon learning about the benefit plan payment, the patient’s son contacted the dentist’s office requesting a cash refund of the amount that had been overpaid. The office manager was concerned by the son’s demeanor and felt that something was amiss with his demands for a full cash refund of the overcharge. The dentist reached out to the Advice Line for guidance.

After assessing the situation, the analyst recommended that any refund that was due to the patient should go back to the source from which it came. Rather than refunding the entire overcharge in cash, the office should refund the original cash payment of $500, then refund the rest through the credit card used to complete payment. Proceeding in this manner would ensure the refund transactions align with the original forms of payment.

Case Study 3: Incomplete Work

A dentist was planning to close his practice upon termination of his office lease, which was at the end of the next month. He had one patient who had been in the process of restorative work for over a year. After extensive endodontic work, the patient had finally been cleared by the specialist to resume the final restorative work by her general dentist. At that point, the patient expressed to the dentist that she was unhappy with the appearance of her upper restorations and wanted to have them redone before finalizing the lower crowns.

Concerned that he would not have access to an office space to complete the treatment the patient wanted to have redone, the dentist contacted the Advice Line for guidance. The analyst pointed out that considering the patient’s history of unrealistic treatment expectations, it would be unlikely that the dentist would have sufficient time to complete her treatment prior to his practice closure. The analyst suggested that the dentist share with the patient his plans to close the practice and provide a referral to a prosthodontist for further treatment of her complex case. Additionally, the analyst encouraged the dentist to consider offering a refund for the portion of treatment that the patient had paid but not completed due to unforeseeable circumstances.

Consider Each Case on Its Own Merits

Patient requests for refunds can vary widely, and each one should be looked at individually. When evaluating a refund request, take three factors into account:

  1. Is the issue at the center money or communication? Sometimes, a patient’s dissatisfaction is related to poor communication. The patient may be satisfied with empathetic listening to their complaint, an apology, a more detailed explanation of the treatment or an understanding that more information will be provided earlier in the process during future treatments.
  2. What is the history of treatment with the patient? Consider how long you’ve been treating the patient, whether you have any misgivings about the work in question and whether you’re confident that the patient’s dental record can withstand legal review if a malpractice lawsuit is filed.
  3. What is the level of trust in the relationship? Consider the level of trust that the patient has with you along with your confidence in the patient’s ability to adhere to the current and future treatment plans. Are they generally reliable and objectively dependable? Refunds can help build trust with a patient and either be part of a solid foundation leading to a lifelong relationship or a way to show empathy during a separation.

If you do agree to provide a refund, it may be appropriate to have the patient sign a release-of-liability form. This document should clearly state that the patient is being issued a refund but should not refer to the quality of care provided by you or any member of your team. This type of document, when properly prepared and signed, may prevent the patient from being able to successfully pursue any future lawsuit in the matter. It will also serve as a record of the agreement's terms and conditions and the parties' intent. TDIC analysts advise caution when presenting release forms, as in some cases requiring the patient to sign a release can inflame an already tense situation. Consult with the Risk Management Advice Line first, where an analyst can advise accordingly and provide a sample release-of-liability form.

The Pros and Cons of Refunds

Offering refunds to dental patients is a choice that can be used to improve patient satisfaction by representing a level of goodwill and empathy on the part of a provider. However, it also comes with risks that must be carefully evaluated before implementation. Ultimately, the decision to honor a refund request should be based on several factors and will vary depending upon the circumstances and, in some cases, upon the patient involved.

Patients who feel that their needs are not being met or who are dissatisfied with their treatment may be more likely to switch to a different dental practice. By offering refunds, practices can show their patients that they value their business and are committed to providing high-quality care.

Another advantage is that refunds can help identify areas for improvement in a dental practice. If multiple patients are requesting refunds for the same reason, such as long wait times or poor communication, this can be a signal that changes need to be made to improve patient experience. Be more proactive in encouraging patients to openly express any concerns regarding their treatment. This can provide an opportunity to reach mutually agreeable resolutions early in treatment, improving patient satisfaction and reducing the likelihood of future refund requests.

On the contrary, offering refunds may create the perception that the quality of the dental care is not worth the full price. Patients may assume that the dental practice is offering refunds because they are not confident in the quality of their services. This can be especially damaging to the reputation of a dental practice, as patients are likely to share their negative experiences with others.

Another risk associated with providing refunds is the potential for financial harm. If a practice offers refunds too frequently or without proper procedures in place, it may be burdensome to operating costs and compound financial difficulties. Additionally, offering refunds for restorations can be particularly precarious, as these products are expensive and require significant time and resources to create. If a patient requests a refund for a restoration, the practice may be unable to recoup the costs associated with high lab fees.

Protect Your Practice With Clear Policies

When offering refunds to dental patients, it is essential to have clear policies and procedures in place. Refund policies should be communicated clearly to patients, so they understand under what circumstances refunds will be offered and what documentation may be required. Refunds should also be issued promptly and in a transparent manner, with clear explanations of the reason for the refund and the amount that will be refunded. This can help prevent misunderstandings and ensure that refunds are given fairly and consistently.

Dental practices should weigh the potential benefits against the risks and ensure that they have policies and procedures in place to handle refunds in an impartial and transparent manner. By taking these steps, dental practices can ensure that refunds are given fairly and consistently and promote a positive patient experience.

When in doubt about patient refunds or other practice, employment, or patient care issues, contact TDIC’s Risk Management Advice Line for guidance.

TDIC’s Risk Management Advice Line is a benefit of CDA membership. Schedule a consultation with an experienced risk management analyst or call1.877.269.8844. Reprinted with permission from the California Dental Association, copyright July 2023.

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