Why Most Dental Claims Get Underpaid (And How to Prevent It) 

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Your Health Magazine

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Why Most Dental Claims Get Underpaid (And How to Prevent It) 

Here’s something that’ll make you angry: right now, you’re probably getting shortchanged on a third of your insurance claims. Maybe more. And the worst part? You have no idea it’s happening.

I’m not talking about denials. Those are obvious; the claim comes back rejected, you fight it or write it off, end of story. I’m talking about claims that get paid, just not at the amount you’re actually owed. The check arrives, your biller posts it, life goes on. Except you just lost money, and nobody noticed.

This happens in practically every dental practice which doesn’t invest in professional dental billing services. A practice submits a claim for a crown prep at the contracted rate of $850. Three weeks later, payment shows up for $710. The EOB has some vague explanation about “benefit limitations” or “usual and customary rates.” Your front desk shrugs, posts the payment, and moves on to the next thing. That $140 difference? Gone forever.

Do that across hundreds of claims every month, and suddenly we’re talking about serious money disappearing into insurance company coffers. Money you earned. Money your contract says you should receive. Money that’s now funding some insurance executive’s bonus instead of your new CBCT machine.

Insurance Companies Bank on Your Inattention

Let’s be honest about what’s really happening here. Insurance companies aren’t making innocent mistakes. They’ve got armies of analysts who’ve studied dental practice operations inside and out. They know you’re busy. They know your billing person is juggling ten different tasks. They know that catching a $50 underpayment on one claim out of two hundred that week is basically impossible without serious systems in place.

So they underpay. Not every claim; that’d be too obvious. Just enough to be profitable while staying under the radar. If they short you on 10% of claims and you only catch and appeal 5% of those, well, they just made money on a 95% success rate for their underpayment strategy.

The math works beautifully from their perspective. Let’s say they underpay 500 claims this month across all their provider networks by an average of $45 each. That’s $22,500. If only 25 providers actually notice and appeal, they keep over $20,000. Even if they lose every single appeal and have to pay the correct amount later, they’ve still won because most of that money never gets challenged.

Your busy front office versus their dedicated payment reduction teams? That’s not a fair fight, and they know it.

The Ways They Short You

Insurance companies have developed some pretty creative methods for paying less than your contracted rates. Once you know what to look for, you’ll start seeing these patterns everywhere.

The Old Switcheroo with Codes

This one drives me crazy because it’s so blatant. You perform a scaling and root planing procedure; four quadrants, significant calculus and bleeding, everything documented properly. You code it correctly as D4341. The insurance company looks at your claim and says, “Nah, we’re paying this as a regular cleaning” (D1110).

Suddenly your $800 procedure gets reimbursed at $85. The EOB says something like “code changed to reflect services rendered,” which is complete nonsense because they never examined the patient. They’re sitting in an office three states away making clinical decisions based on… what exactly? Their desire to pay less, that’s what.

I’ve seen this happen with crown buildups getting paid as fillings, comprehensive exams getting paid as limited exams, and deep cleanings getting paid as regular prophys. Each time, the insurance company is betting you won’t notice or won’t bother fighting about it.

Playing Games with Fee Schedules

Every insurance contract specifies exactly what they’ll pay for each procedure code. These fee schedules are legally binding because you agreed to accept certain rates in exchange for being in their network and getting access to their patients.

The funny thing is, insurance companies seem to forget about these agreements pretty regularly. They’ll process your crown claim under last year’s fee schedule (which was lower). Or they’ll apply the fee schedule from a different plan tier. Or they’ll just make up a number based on “usual and customary rates in your area,” which has nothing to do with what your contract actually says.

I worked with a practice last year that discovered Delta was paying them using a fee schedule from 2019. Two contract renewals had happened since then, both with rate increases, but somebody in their payment department never updated the system. Or more likely, they updated it but “forgot” to apply it to this particular practice. Either way, the practice had been underpaid on literally thousands of claims over two years.

When we finally caught it and appealed, Delta acted shocked that this error had occurred. They paid the difference for recent claims within the appeal window, but all that money from older claims? Lost forever because the practice didn’t catch it in time.

The Frequency Limitation Scam

Most insurance plans limit how often they’ll cover certain procedures. Two cleanings per year, one set of bitewings every twelve months, whatever. These limitations are legitimate when they actually exist in the patient’s plan.

The problem is insurance companies apply frequency limitations that aren’t real. A patient comes in for their second cleaning of the year, well within their benefits. You submit the claim, and it comes back denied or reduced because “frequency exceeded.” Except when you actually dig into the patient’s specific plan documents, there’s no such limitation. The insurance company just made it up, hoping you wouldn’t check.

Or they apply the limitation incorrectly. Maybe they’re counting from the calendar year instead of the benefit year. Maybe they’re confusing adult prophys with perio maintenance. Maybe they’re just wrong. But the payment gets reduced, and most offices never figure out what happened.

Coordination of Benefits Nightmares

When patients have coverage through two insurance plans, things get complicated fast. Primary insurance pays first, secondary insurance covers part of what’s left. Pretty straightforward in theory.

In practice? Insurance companies use coordination of benefits as an opportunity to shorten your coming and going. The secondary carrier might calculate their payment based on what primary actually paid instead of what they should have paid according to their own fee schedule. Or they’ll claim the wrong policy is primary. Or they’ll apply some obscure COB rule that doesn’t actually appear in either policy.

I’ve seen secondary carriers refuse to pay anything because “primary covered the procedure,” even though primary only paid 50% and secondary is supposed to cover the gap. The EOB is full of insurance jargon that sounds authoritative but doesn’t actually explain why they’re not paying what they owe.

Catching these issues requires comparing multiple EOBs, understanding both policies, and knowing exactly how COB should work. Most front desk staff don’t have time for that level of detective work on every claim, which is exactly what insurance companies count on.

Bundling Things That Shouldn’t Be Bundled

Some procedures legitimately get bundled; they’re components of a larger service rather than separate billable items. But insurance companies have started bundling things that should absolutely be paid separately.

They’ll bundle an exam into a restorative procedure code. They’ll combine multiple X-rays into a single payment. They’ll decide that two distinct services you provided were really just one service and pay accordingly. The EOB says “services combined per plan guidelines” without specifying which guidelines or why they apply.

Unless you maintain detailed knowledge of legitimate bundling rules across every insurance carrier you deal with and those rules change constantly; these underpayments just look like normal claim processing. The payment seems reasonable at first glance. It’s only when you actually calculate what each service should have been paid separately that you realize you got shorted.

What This Is Really Costing You

Yeah, the direct revenue loss hurts. If you’re losing $30 per claim on 30% of your claims, and you process 400 claims monthly, that’s $3,600 every single month walking out the door. Over a year, we’re talking about $43,000 in underpayments. For many practices, it’s way more than that.

But here’s what really gets me: the longer-term effects of not catching this stuff.

Insurance companies track which providers challenge underpayments and which ones don’t. Their systems literally flag your practice as either “vigilant” or “easy mark.” Once you’re in the easy mark category, the underpayments get more aggressive because the data shows you don’t push back effectively.

It’s like getting a reputation in high school. Once word gets around that you won’t stand up for yourself, people take advantage. Insurance companies are the same way, except they’re doing it with sophisticated algorithms and payment processing systems instead of cafeteria bullying.

And think about what you could do with that money if you were actually collecting it. New equipment that improves patient care and practice efficiency. Competitive salaries that let you attract and keep excellent staff members. Marketing that brings in better cases. Continuing education that makes you a better clinician.

Instead, that money’s padding insurance company profit margins. They’re literally using your money to pay dividends to shareholders while you’re trying to figure out how to afford that new operating chair.

How to Actually Stop This

Alright, enough depressing reality. Let’s talk about what actually works to prevent underpayments. I’m not going to give you some theoretical framework that sounds good but doesn’t work in real practices. This is what I’ve seen actually succeed.

Get Your Fee Schedules Organized

You cannot catch underpayments if you don’t know what you’re supposed to be paid. Sounds obvious, but most practices don’t have this information readily accessible.

You need a reference document; something like a spreadsheet, binder, whatever works that shows your contracted rates for common procedures under each insurance plan you accept. Not the charges you submit. The rates the insurance company contractually agreed to pay.

When payment comes in for a crown, your biller should be able to glance at this reference and immediately see whether $850 matches the contracted Delta PPO rate. If it doesn’t, that claim needs investigation before the payment gets posted.

This takes some work to set up initially. You’ve got to dig through all those contract renewal letters that insurance companies send (which most practices throw in a drawer unread). But once it’s organized, maintaining it is straightforward. When fee schedules update, you update your reference document at the same time.

With a professional approach, you can keep your fee schedules current and prevent the recurring issue.

Verify Before You Post

The biggest mistake practices make is posting insurance payments without verification. The check arrives, the EOB says it paid $X for procedure Y, and your biller enters that into the practice management system. Done.

Except you just accepted whatever the insurance company decided to pay without checking whether it’s correct. That’s like letting your contractor tell you they completed the work and just paying their invoice without looking at what they actually did.

You need a verification step before posting. Not on every single payment—that’s not realistic for high-volume practices. But you need filters that catch suspicious payments.

High-dollar procedures should always get verified. If you did a crown and core buildup totaling $1,200, somebody better be checking that the payment matches contracted rates before posting it. The time investment is maybe two minutes, and you’re protecting a significant amount of revenue.

Procedures where you’ve historically seen underpayment problems need automatic verification. If you know Delta routinely downcodes your perio maintenance claims, every single Delta perio maintenance payment should get checked.

Payments that seem weird deserve a second look. If the number just feels off like maybe too low, maybe an odd amount that’s your instinct telling you something might be wrong. Listen to it.

Document Everything Like You’re Going to Court

Insurance companies look for any excuse to reduce payments, and weak documentation hands them that excuse on a silver platter. Every claim you submit needs documentation that makes your clinical judgment absolutely clear and defensible.

When your hygienist does scaling and root planing, the chart needs probing depths, bleeding on probing percentages, attachment loss measurements, and clinical notes describing calculus and inflammation. Not vague “moderate calculus noted” garbage but specific, measurable findings that clearly support the procedure code you’re billing.

Good documentation serves two purposes. First, it prevents legitimate questions about your coding. If everything’s properly documented, there’s no reasonable basis for an insurance company to second-guess your clinical decisions.

Second, when insurance companies do inappropriately downcode despite solid documentation, you’ve got ammunition for your appeal. Try arguing with a chart note that says “generalized 5-7mm probing depths, 40% bleeding on probing, heavy subgingival calculus, radiographic bone loss evident.” They can’t claim that’s a routine prophy without looking ridiculous.

Train your clinical team that documentation isn’t bureaucratic busywork, it’s revenue protection. Every minute spent properly documenting is worth multiples of that in prevented underpayments.

Appeal Everything

Here’s where most practices fail. They catch an underpayment, recognize it’s wrong, and then… do nothing. Or they appeal to the big ones and let the small ones go.

Bad strategy. You need to appeal every single underpayment you identify, regardless of dollar amount.

This isn’t primarily about recovering the fifty bucks on one claim, though obviously that matters. It’s about training the insurance company’s systems to process your claims correctly because underpaying you creates work and costs them money.

Insurance companies track appeal rates by provider. When their data shows that you appeal aggressively and win most of them, their payment algorithms adjust. It becomes more expensive for them to underpay you than to just process claims correctly in the first place.

I’ve watched this happen. Practice starts by appealing everything systematically. The first few months, they’re recovering underpayments on maybe 30% of claims. After six months of consistent appeals, the underpayment rate drops to 10%. After a year, it’s under 5%. The insurance companies literally changed how they process that practice’s claims because paying correctly became cheaper than dealing with constant appeals.

Create appeal letter templates for common situations. Reference specific contract language that establishes your right to higher payment. Make your appeals clear, professional, and difficult to deny without looking stupid.

And file them fast. Most plans give you 30-90 days to appeal. Miss that window, and you’ve permanently lost the money.

Consider Whether You Need Professional Help

Some practices have the internal resources to implement all this systematically. Many don’t, especially smaller or mid-sized practices where everybody’s already juggling multiple roles.

Professional dental billing companies, like TransDental, make their living catching underpayments. They maintain current fee schedules across hundreds of insurance plans. They employ specialists who do nothing but appeal all day. They’ve got established relationships with insurance company payment departments.

Most work on a percentage of collections, typically 4-8% which means their interests align perfectly with yours. They only make money when you get paid correctly.

The math often works surprisingly well. Yeah, you’re paying them a percentage. But if they’re recovering an extra $50,000 annually in underpayments you were previously missing, and their fee is $4,000, you just netted $46,000 you wouldn’t have otherwise seen.

At minimum, consider having a billing service provider audit your payments for a few months to see what you’re missing. Even if you decide to handle it internally going forward, the audit shows you exactly where your vulnerabilities are.

Fighting Back Successfully

When you catch an underpayment, how you handle the appeal makes a huge difference in whether you actually recover the money.

Start fast. Insurance companies impose strict deadlines, and they’re not flexible about them. If the deadline is 60 days from the payment date and you submit your appeal on day 61, you’re done. They’ll deny it on procedural grounds without even considering whether you’re right about the underpayment.

Put everything in writing. Phone calls are worthless because there’s no documentation, and insurance reps can tell you whatever they want without accountability. Written appeals create a paper trail and get taken more seriously.

Your appeal letter needs specific elements. Claim number and service date so they can find it in their system. The procedure code you submitted and what you were paid. The contracted fee schedule rate for that code. A clear statement that the payment violates your contract. Supporting documentation including relevant fee schedule pages and clinical notes.

Don’t accept runaround responses. Insurance companies love responding to appeals with vague explanations that don’t actually address your point. “This payment reflects usual and customary rates for your area.” Okay, but your contract doesn’t say anything about usual and customary rates; it specifies exact amounts per procedure code. Make them address the actual contract language.

If they keep stonewalling, escalate to your state insurance commissioner. Insurance companies hate regulatory involvement and often settle immediately when commissioners start asking questions. A simple letter describing the pattern of underpayments frequently results in full payment plus interest.

Track Whether It’s Working

You can’t improve what you don’t measure. Set up metrics that show whether your underpayment prevention is actually working.

Calculate your collection rate as a percentage of contracted fees, not charged fees. This shows whether you’re collecting what you’re entitled to under your contracts. Run this monthly and watch for trends. If it’s improving, your systems are working. If it’s declining, something needs adjustment.

Monitor time from service to payment. Effective underpayment prevention often speeds up payment because insurance companies learn they can’t delay hoping you’ll accept whatever they eventually send.

Track your appeal success rate. You should win the vast majority of underpayment appeals because they’re typically clear contract violations. If you’re losing a lot of appeals, either you’re appealing incorrectly or you need to strengthen your documentation.

Stop Leaving Money on the Table

Look, I get it. You went to dental school to practice dentistry, not to become an insurance payment expert. You’d rather spend your time treating patients than fighting with insurance companies over payment discrepancies.

But here’s the thing: you already did the hard part. You diagnosed the condition, developed the treatment plan, performed the procedure, educated the patient, and submitted the claim. All that work is done. The only thing standing between you and proper payment is inadequate systems for catching underpayments.

Every dollar you don’t collect from insurance companies is a dollar they’re keeping despite contractual obligations to pay it to you. That’s not extra profit you’re chasing. That’s compensation you legitimately earned that should have been yours from the start.

Insurance companies are counting on you being too busy, too overwhelmed, or too resigned to fight for correct payment. They’ve built entire business strategies around provider inattention. Prove them wrong.

Set up the systems, verify the payments, appeal the underpayments, and train the insurance companies that your practice isn’t an easy mark. The money you recover funds everything else you want to do in your practice. You’ve earned it. Go collect it.