Maximum contract allowance, also known as maximum plan allowance is the amount that is reimbursed for each dental service by the dental insurance companies. These amounts are pre-decided by the payers, for each dental service, and are dependent upon the enrollee’s dental insurance plan. It helps to calculate how much the insurance pays and the total patient liabilities for a particular treatment.
How are Maximum Contract Allowances Determined?
Deductibles, maximums, co-payment, and co-insurance amounts are decided based on the maximum contract allowance of a dental insurance plan. The in-network and participating dental practitioners are dental service providers who accept maximum contract allowance as full payment for the services rendered. However, non-network and non-participating dental practitioners have the authority to charge more than the maximum contract allowance. It is then the responsibility of the patient to pay the difference in the amount (balance bill) charged and maximum contract allowance. This additional amount cannot be added to co-payment, co-insurance, or deductibles.
For instance, if a patient chooses to see an in-network (or participating) dental practitioner and the max contract allowance for the services rendered is $100, they will accept $100 as full payment for their service. As per policy, if the insurance covers 80% i.e. $80, of the maximum contract allowance, the remaining 20% i.e. $20, will be the co-payment amount. This will be the patient’s responsibility to settle.
On the other hand, if a patient chooses to visit an out of network (or non-participating) dental practitioner, and they charge $120 for the same service; while the maximum contract allowance is $100, the insurance company will only reimburse 80% of the maximum contract allowance i.e. $80. The remaining $40, where $20 is the co-payment amount and $20 is the balance bill, will then be the responsibility of the patient to settle.
Considering all the intricacies involved, it becomes highly important for a dental practitioner to be well versed with all their patient’s policies and insurance protocols. If not, it can lead to revenue loss and claim denials. In the modern world, where there are multiple variants of policies, it has become strenuous for dental practitioners to be up to date with every detail.
Therefore, most dental practitioners’ opt. for dental billing companies like Capline dental to handle all the necessary steps of the revenue management cycle. Such companies serve as a reliable source to bolster the dental billing cycle and help practitioners grow.