Like many other offices, you may struggle with certain aspects of dental billing. Maybe your collections are decreasing and fluctuating, and you don’t know why. Maybe you simply feel your office isn’t running at its best. Either way, you need to find a solution. You may be deciding between an internal fix or employing an outsourced dental billing company, but what does an outsourced company cost and what are the services provided?
At Dental ClaimSupport, a remote dental billing company, every chat or call we receive from a dentist concludes with the same question:
“How much does it cost?”
This article will clearly communicate the expected expense for a practice so you can make an informed decision on whether outsourcing is the viable option for your practice.
Let’s face it, transparency around cost is what you need before making a decision to work with any third-party. After reading this article you will have a full understanding of how various dental billing companies charge. Additionally, you will know the factors that affect the cost of outsourced dental billing along with the many different services provided. This will ensure an accurate estimate of what it will cost your office on a monthly basis.
Outsourcing vs. in-house dental billing: comparing costs
To make the right decision, you must compare outsourced costs vs in-house costs and consider what’s best for you and your practice.
The average cost for outsourced dental billing is about $1,500-$1,600 per month.
By comparison, a dental office insurance coordinator (in-house) salary average is $18.26 per hour, according to a 2020 Ziprecruiter article.
In-house W2 employees have overhead costs above and beyond their hourly or salary rate. W2 employees for any business cost on average 1.25 to 1.4 times base salary range. This extra compensation includes employer taxes such as social security, federal and state unemployment, Medicare, workers’ comp insurance, payroll costs, as well as any benefits you may offer.
This means you can expect the total compensation for one of these employees to be 25% to 40% higher than their base salary.
An insurance coordinator earning $18.26 per hour will actually cost you between $47,476 and $53,173 per year in salary cost.
Here is the math:
In-House Dental Billing:
$18.26 x 80 Hours (Bi-Weekly Payroll) = 1,460.80 Bi-Weekly Pay
$1460.80 x 26 Pay Period = $37,980.80 Annual Salary
Low End (Multiply by 1.25) $37,981 x 1.25 = $47,476
High End (Multiply by 1.4) $37,981 x 1.4 = $53,173
Average of $47,476 and $53,173 =
Average Annual In-House Insurance Coordinator Salary
At $18.26 per hour, your average dental insurance coordinator costs your practice $50,325 in annual salary, which includes the benefits and employer taxes.
Any bonuses given to employees would be additional to this calculation.
Let’s break this down with a head-to-head cost comparison.
The average cost for outsourced dental billing is about $1,500-$1,600 per month.
Let’s multiply this by 12 months to get your annual expense.
Here is the math:
Outsourced Dental Billing:
$1,600 Average Monthly Cost x 12 Months = $19,200 Average Yearly Cost
Average In-house Cost : $50,325
Average Outsourcing Costs : $19,200
$50,325 – $19,200 = $31,125
With this cost calculation comparison, it has been determined that outsourcing can save a dental practice $31,125 per year.
Factors that affect your monthly costs for outsourced dental billing
Insurance revenue only
Most outsourced dental billing companies charge based on your insurance collections only. The billing companies will take care of your insurance accounts receivables only for the included fee. Patient AR is an additional service provided by only some dental billing companies. Since it’s a stand alone service, it will typically add to your monthly cost.
The size of your practice
The size of your practice is a determining factor in pricing.
Some practices have one doctor, while others have multiple providers. The number of providers rendering services dictates the collections. Most dental billing companies charge based on how much you are collecting from insurance on a monthly basis.
These are the different tiers of insurance collections:
Average cost of outsourced dental billing based on monthly insurance collections:
$25k Collected = Avg. Monthly Cost Range $1,250-$1,300
$50k Collected = Avg. Monthly Cost $1,750
$75k Collected = Avg. Monthly Cost $2,625
$125k Collected = Avg. Monthly Cost $4,250
$175k Collected = Avg. Monthly Cost Range $5,125-$5,625
$250k Collected = Avg. Monthly Cost Range $6,000-$7,250
The popular billing method is based on tiers; however, there are a few billing companies who may bill differently such as based on an hourly rate or practice production. Charging by insurance collections only prevents dental billing companies from receiving a percentage of any patient collections. It also prevents PPO adjustments from being a factor in the costs if one did charge off production.
Startup location and new practice cost structure
Starting a new practice can be an exciting and daunting task. Without knowing your projected production and collection levels prior to opening, many startups will be considered under a “Startup Pricing”. Startups do require initial setup of the software, which would include set ups for the providers, claims, and fees. For a single doctor startup, this may be a flat fee ranging from $750-$1300 per month for a set period of time, typically 3-5 months once patients have been seen and claims have started to be sent.
If you plan to credential with a PPO at your new location, it is important for startup locations to begin calling dental billing companies at least 3 months prior to opening. Each insurance company is different in how credentialing is handled. Some plans can take up to 90 days for credentialing once they have all the paperwork necessary to begin the application. You can find more information and additional pricing on credentialing below.
Multi-location dental practices
If you have multiple locations, this may affect different pricing based on the number of locations and the production and collection levels of each practice combined. In most cases, those locations would be combined for billing purposes. However, there are circumstances where different offices could be billed separately.
For a conservative estimate, add the monthly insurance collections from each practice and see the pricing schedule above.
What are the common dental billing services included?
These are the most common services that dental billing companies include in the fee discussed above:
What additional fees are charged by dental billing companies?
There may be some fees that may be charged in addition to the fees discussed above:
Set Up Cost
Set up fees range from $200-$999
Set up costs vary by company and may include IT services to install software on equipment furnished by the outsourced dental billing company. Set up fees include the warranty and shipping on computer equipment and team training
Stamp costs range from $0.50-$0.75 per item
Most companies charge a standard rate for each stamp used when mailing claims or sending a statement is necessary
PPO Fee Schedule Entering
Fee Schedule entering ranges from $100-$200
Medical Billing may be billed per claim sent up to $50-$75 as well as some range from 5%-8%
Some companies charge the percentage on the production number and some will bill the percentage on the collected amount
Monthly EFT Reconciliation ranges from $150-$300
What add on services may be offered by dental billing companies at an additional cost?
These are additional services that can be performed by dental billing companies at an additional cost:
Credentialing services may be necessary to ensure proper timely payment is received
Credentialing one provider with one insurance will range from $200-$500
Credentialing fees can vary depending on the number of providers and payer requirements
The more PPOs you will be in network with, the less you will pay per insurance
PPO Fee Negotiations
PPO Fee Negotiations are often one flat fee per insurance or umbrella network
These can range from a couple hundred dollars to thousands based on the network PPO Fees are negotiated
Some insurance companies will not negotiate or be part of a larger umbrella network (i.e. Delta Dental)
For more information on umbrella networks, please refer to the Credentialing article
Insurance Verification pricing can be hourly or per claim
The different levels of insurance verification can affect price
Those levels may include: Eligibility, Standard Breakdown, Full Breakdown
Additional fees may include scanning into a patient chart as well as data entry into the software for treatment plan calculation purposes
For more information on Insurance Verification, please refer to insurance verification blog
Patient Collections may be charged per patient/family, collection percentage, or by size of your practice
The fees vary between around $10-$12 per patient, 3-5% of collections, or even $500-$1400/month based on practice size
Is outsourced dental billing a good fit for your dental practice?
Lower overhead is certainly a major factor in one’s decision to make higher profit.
However, comparing costs versus in-house is just one aspect to consider when it comes to outsourcing.
Other considerations could be employee turnover, multiple insurance coordinators, or you just want change in the position. You may not be inclined to relinquish the duties to an outside agency.
Do your own math. Or ask someone to help you.
Look at the collection numbers in your software, specifically your insurance collections each month. Look at your insurance aging report to see how many claims you have outstanding to insurance.
To calculate your insurance collection percentage, dive into your software reporting: