Most dental offices run into the following situation at some point. This situation is especially vexing when they're using insurance estimating. Below is an example situation with an example solution. You will need to apply the same principles to resolve this problem.

BackgroundA Patient has insurance coverage. They come in for a surface restoration, also known as a filling (just as an example). They talk it over with the doctor and decide to go ahead and get a composite filling so it looks like their tooth. The problem is, their insurance only covers amalgam fillings (also known as silver) on their molars.

*So now what?*

Charges and Insurance ClaimFirst, the office will enter the charge in dental or ledger tabs using the procedure code that they actually performed, such as the composite restoration.

They file the insurance claim to the patient's insurance, including the charge that the office performed.

Payment and Insurance EstimatingIf the office is not using insurance estimating, they will simply enter the payment information when they receive it from the insurance. Both the allowed amount and the amount paid would be in line with what they'd get for the amalgam restoration, even though they did the composite.

If the office is using insurance estimating, the best option is to use a flat rate. In this case, the office knows that this insurance will pay an exact amount for the filling, so they enter it on the insurance plan's flat rate amount for that procedure.

Estimating formulaNow we need to calculate the flat rate we will use. Essentially, we are taking the amalgam allowed amount, as we know this procedure is explicitly covered. We will use our insurance estimation formula to determine how much will be paid, and then we will enter that amount as a flat fee for the composite that we want to calculate properly.

Here are the steps for this particular case.

- Office will write off [Fee for composite] - [Allowed for composite] = [Write off amount for composite]
- Then insurance will pays [Allowed for amalgam] - [Deductible or copay] x [Percent covered for restorative procedures]
- Then patient pays [Fee for composite] - [Write off amount for composite] - [Insurance paid amount]

Or in other words, the patient pays [Allowed for composite] - [Allowed for amalgam] *and* [Allowed for amalgam] x [Percent not covered for restorative procedures]

Office's Write Off (Step one)

[Fee for composite] - [Allowed for composite] = [Write off amount for composite]

In the first image above, you can see that the office charges $278 for the composite filling code D2392. The insurance allowed amount is only $96, as shown in the second image. However, the insurance will only pay $75, the allowed amount for the silver filling code D2150.

So first we'll calculate the office's write off. As in step one, we take the fee for the composite ($278), subtract the allowed amount for the composite ($96).

$278 - $96 = **$182 Write off.**

The below screenshot indicates how this would appear on the ledger.

Insurance Flat Rate (Step Two)

[Allowed for amalgam] - [Deductible or co-pay] x [Percent covered for restorative procedures]

In order to calculate the flat rate, we need to take 80% of the allowed amount for the amalgam (D2150). In this case, we take 80% of $75. There is no deductible or co-pay in this example. If there was, we would first subtract the deductible/co-pay.

$75 * .80 = **$60**

The office will enter this $60 as the flat rate for the composite filling as shown in the second image.

Patient Pays (Step Three)

[Fee for composite] - [Write off amount for composite] - [Insurance paid amount]

Finally, we can calculate how much the patient will pay. We will take the fee for the composite, subtract the write off and the insurance paid amount, and the remainder is how much the patient is responsible for.

So we'll take the $278 composite fee, and then subtract the write off ($182) and the Insurance Paid amount ($60). This leaves us with $36.

$278 - $182 - $60 = **$36.**

Alternatively, you can also calculate how much the patient pays with these two formulas, as these are the two portions the patient will be responsible for.

[Allowed for composite] - [Allowed for amalgam]

and

[Allowed for amalgam] x [Percent not covered for restorative procedures]

Or in other words, the patient pays...

$96 - $75 = $21

and

$75 * .20 = $15

$21 + $15 = **$36**.

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