Dental Practice Audits

Dental audits were rare at one time.  Now, however, with insurance companies and third party payers auditing more routinely, it is much more likely that a dental practice will fall victim to an audit.  Most dental practices that are contracted with dental plans are audited at least once during the course of their practice.  Many of these dentists are left wondering why audits are becoming a more routine exercise of third party payers.  The answer: alarming statistics.  The Federal Bureau of Investigation estimates that ten percent (10%) of the money expended on health care is due to fraudulent activity.  Insurance companies estimate that fraudulent health care billing represents up to $10 billion each year. 

In addition, Medicare fraud is becoming more rampant.  The United States General Accounting Office estimated that out of every $7 spent on Medicare, $1 is lost to Medicare fraud.  Fraud is adding enormous costs to the nation’s health care system.  As more and more fraudulent health care charges rack up for insurance companies to pay, insurance companies are becoming serious about auditing health care practices.  With a thorough understanding of the audit process, dentists will be better prepared for what appears to be the inevitable. 

After receiving notice of an impending audit, dentists often wonder why their practice has been targeted.  Generally the audits conducted by dental plans and third party payers are a method of showing state regulators that the patients are receiving quality care.  A third party payer is an organization other than the patient (which would be the first party) or health care provider (also known as the second party) involved in the financing of health care services. The audits are typically meant to check the status of a dental plan and are not meant to be a check on the specific dental practice.  The selection process third parties undertake to audit a given dental practice varies.  Third parties may randomly pick dental practices on the basis of how likely the practice is to have discrepancies once audited.  The third party’s goal is to recoup lost dollars, and so this strategy is chosen to allow a third party to obtain the largest return. 

A dental practice is most likely to be audited after submitting atypical claims online.  Each claim submitted is analyzed by a third party payer.  The auditors flag abnormal or atypical charges, as these may suggest provider abuse.  Additionally, third parties track information on practice charges by analyzing the average cost per claim, average cost per person, and how often certain treatments are performed.  With this information, the third parties target specific dental practices for an audit. 

Auditors typically share common goals.  By conducting audits, third party payers are attempting to prevent abuse of the payment system.  By performing audits on practices, dentists are forced to understand the importance of keeping records and submitting only honest and accurate claims.  Also, dentists are more likely to keep accurate records and submit truthful claims when they know an audit may be lurking than if they assume their dental practice will never fall victim to an audit.  A second goal ties in with the first, and that is to help dentists understand and follow the third party payer’s guidelines.  Finally, the auditors are trying to find instances of overpayments to dental practitioners for claims the dental practice has submitted. 

Many dentists want to know what to expect if their practice gets hit with an audit.  First, the dentist will most likely be notified of the impending audit by a letter, however the third party payer may make initial contact with the dental practice by telephone.  When a telephone call takes place, a day and time for the audit will be arranged, and the dentist should ascertain what type of audit will be conducted.  It is also advisable to ask why the audit is being performed.  The answer may be that it was simply a random selection, but a dental practitioner should make certain that it was not because of a claim submission that the third party payer flagged as abnormal.     

When auditing the dental practice, the insurance plan will most likely send representatives to the dental practice to ensure that billing claims match documentation in patient files.  Auditors will analyze whether amounts paid to the practice were for an actual member of their insurance plan, whether the services rendered were actually provided according to treatment plans, and whether the services provided by the dentists were in accord with federal law. 

Additionally, auditors may analyze patient files.  Auditors may be interested in reviewing patient medical histories, dental histories, documentation of oral examinations, treatment notes, diagnosis, procedures completed, the outcome of each procedure, and follow-up care. It is also possible that documentation supporting submitted claims will be requested during an audit.  Problems encountered during audits are most likely to be caused by improper documentation of records rather than by fraudulent billings.  The dentist is typically without recourse if the records in the patient file do not match up with the claims billed. 

Various state laws and the HIPAA (Health Insurance Portability and Accountability Act) Privacy Rule permit third party payers to access and review the health records of their own members.  However, third party payers are no longer permitted to access the records of patients who are not enrolled in their plans like they were in the past.  Therefore, third party payers are no longer able to compare their enrollees’ records and charges with those of patients not enrolled under their plans.

Aside from auditing the patient files, the third party payer may also access the quality of the facility, the maintenance of the equipment, the level of difficulty patients on their plan encounter in obtaining appointment times, and the level of compliance with federal regulations during the course of the audit.  It is prudent that the dentist remains with the auditor at all times.  It is worth the time to clear the calendar on the day of the audit and to stay with the auditor as patient and billing records are reviewed.  Also, the staff of the dental practice should be prepared for the audit, and the dentist should discuss the procedures to be followed prior to the day it is conducted.

Since dental audits are becoming a routine part of doing business, dentists must protect their practice by preparing their office for an audit.  To prevent audit problems, dentists should make themselves aware of terms of any third party contracts, keep the plan manuals in a safe place so the dentist can refer back to them, ensure each procedure performed matches the procedure billed, and ensure that all patient records are organized and contain all relevant information on each patient.  Also, when claims are filed online, ensure that the correct price is sent to the third party insurer.  With a more thorough understanding of third party audits and the third party payer’s motivation for conducting them, dentists will be more likely to avoid costly mistakes.

The Importance of Privacy

Privacy is something we all value. Especially with new discoveries in the link between good oral hygiene and overall medical health, it should not come as a surprise to anyone that dentistry patients want to ensure more than ever that their personal information will not be shared with anyone without a legitimate need to know.  Under the US Department of Health and Human Services (, HIPAA Rules were created to ensure that all healthcare professionals respect and protect a patient’s privacy.   How well does your office comply with HIPAA guidelines?


The Health Insurance Portability and Accountability Act (HIPAA) became law in 1996.  HIPAA provides federal protections for personal health information held by patients. The HIPAA privacy rule does permit the disclosure of personal health information needed for patient care and other important purposes related to a patient’s care.  The Security Rule under HIPAA specifies a series of administrative, physical, and technical safeguards or security measures required for covered entities (dental offices that transmit patient information in electronic form) to assure the confidentiality, integrity, and availability of electronic protected health information. 

The Privacy Rule establishes a federal requirement that dentists and other medical practitioners obtain patient consent before using or disclosing a patient’s personal health information for treatment, payment, or healthcare operations. 

Private health information, also known as PHI, is any information relating to a patient’s health, treatment, or payment for healthcare that identifies a patient.  Private health information includes, but is not limited to: names, addresses, phone numbers, fax numbers, e-mail addresses, credit card information, certificate numbers, license numbers, account numbers and birth dates. Many dental employees, including dental assistants, dental hygienists, lab technicians and front office staff, may come into contact with PHI.  PHI should be carefully secured and traced throughout the dental office. 

Although compliance ismandatory only for “covered entities”, the American Dental Association suggests that dentists who are not covered entities adopt the same privacy practices. It is still possible that the HIPAA privacy laws may establish an industry standard among dental practices and failure to comply with the industry standard may result in liability.

How is PHI stored in our office?  Who is authorized to access the information?  How is the information stored and how is it secured?  How and when is this information destroyed?  Where in the office is it appropriate to discuss personal health information?   Do we have an adequate and recorded procedure for training?

Answers to these questions cannot be left to interpretation; healthcare providers must adopt privacy procedures for their offices, ensuring that patient records are kept in a secure space and that employees are trained on privacy policies, making records inaccessible to those who do not have a legitimate need to view them. Most of the information gathered on patients requires these security measures.  Thus, the entire dental office must be aware and held responsible to avoid costly violations. 

HIPAA Violations

Failure to comply with HIPAA can result in both civil and criminal penalties.  These penalties vary based on the nature of the violation and the extent of the resulting harm.  Healthcare entities and individuals who obtain or disclose individually identifiable health information face a penalty ranging from $100 to $50,000 per violation, as well as imprisonment up to one year.  However, offenses committed with intent to use the information for personal gain, harm, or commercial advantage face a more serious fine of $250,000 and imprisonment for up to ten years.  Also, if a state has privacy laws more stringent than the federal regulations, the state laws will supersede HIPAA.

It is important to note that not only are employers held liable – employees who knowingly violate a HIPAA rule may be subject to a criminal penalty as well.

Dental Advertising

Dentists have a right to promote their practices through various forms of advertising. However, ethical guidelines regarding advertising must followed. Section 5 of the American Dental Association’s Principles of Ethics and Code of Professional Conduct sets forth certain standards in part by stating that no dentist shall advertise or solicit patients in any form of communication in a manner that is false or misleading in any “material” respect.

This standard has been implemented in order to protect the general public from false and misleading advertising that may induce a patient to seek dental services from a particular office. Although some states may not have adopted Section 5 of the ADA’s Principles of Ethics and Code of Professional Conduct, Section 5 sets forth a good guideline that all dentists should follow. The fundamental issue in dental advertising is whether the advertisement is false or misleading in any material aspect.

The first step to ensuring compliance with ethical advertising is to understand advertising regulations, standards and the law. With a proper understanding, dentists will be able to market their practices and also avoid legal problems associated with perceived false or misleading advertising. Some dentist practices have already began to implement these legal strategies, Columbia Dental has been known to be one of the first to follow the new published regulations.

Rules that govern the marketing of businesses [including dental practices] are generally enacted by the Federal Trade Commission. There are various forms of marketing, such as advertising in magazines, newspapers, billboards, Vinyl Banners, on the internet, radio, or even television. The Federal Trade Commission is constantly monitoring advertisements, which includes dental advertising.

Dental advertisements must be truthful and non-deceptive. For an advertisement to be completely truthful, it must have evidence to back up each assertion of fact. An advertisement is non-deceptive if it is not likely to mislead a reasonable consumer and does not omit any necessary information for the consumer to make an informed decision regarding whether to obtain services at a specified dental practice. Regardless of the claim, all material information must be disclosed in a manner that a reasonable consumer could understand. Disclosures, if typed, should be in a size large enough for a consumer to clearly read, and failure to comply with this requirement may result in the disclosure being deemed inadequate. Furthermore, an asterisk or other symbol should be used to call attention to the disclosure, especially if the disclosure is placed at the bottom of the advertisement.

In order to determine if an advertisement may be of a concern to the Federal Trade Commission, the advertisement must be considered in its entirety. Even if all of the statements in the advertisement are true, but the pictures are deceptive, then the advertisement may violate the Federal Trade Commission’s advertising standards [and the advertisement may also violate the guidelines set forth by a particular state dental board or state law]. Also, the advertisement should not imply something other than what the advertisement is intending to communicate.

Advertisements that incorporate statistics must be accurate. If a dental advertisement is using statistics, then there must be accurate data to back up the advertising assertion. The Federal Trade Commission requires dental claims regarding consumer health to be supported by reliable scientific evidence and medical data. This evidence may include research, studies, tests, and analysis, which are conducted by dental experts and professionals in an objective manner

Obviously, non-factual, silly claims or jokes contained in a dental advertisement which no reasonable person could possibly regard as harmful will not be considered false and misleading.

The Federal Trade Commission has extensively regulated claims such as price reductions. Dentists should be aware of the relevant standards for this type of advertising. First, if a former price is specified in an advertisement, the price must be the actual price of the goods or services offered for a reasonably substantial amount of time, and on a regular basis. If a former price is not specified, and a sale price is announced, the sale price must be such that a reasonable person with knowledge of the former price would regard the goods or services as a legitimate savings.

Next, if a specific dental advertisement compares the prices of one dental practice to another [yes, this actually does occur], then the competitor’s prices that are listed in the advertisement “must” be the actual prices charged by the competing dental practice. Falsely stating the price of services for a competing dental practice in an advertisement is considered misleading and deception advertising.

Obviously, truthful advertising is important to both the American Dental Association and to Federal Trade Commission. All states have laws that prohibit false, deceptive or misleading dental advertising. If a dentist violates certain rules and regulations regarding the prohibition of false and deceptive advertising, then the violation could result in a fine, injunction, censure, suspension or revocation of a dentist’s license. Clearly, dentists who advertise must comply with the Federal Trade Commission, and each dentist must also comply with their own state law [and dental board requirements ]regarding advertising.

With the explosion of the internet, many state dental boards are taking an “active” role in monitoring dental advertising on the internet. A growing area of concern regarding advertising on the internet is that dentists are claiming they are specialists in areas that are not considered or recognized as specialty areas. For example, if a particular state dental board does not recognize cosmetic dentistry as an area of specialty, and a dentist advertises on the internet that they are a “specialist” in the area of “cosmetic dentistry”, then that particular state dental board may consider the advertisement as false and misleading, which could result in disciplinary sanctions against that particular dental practice. This is something to consider when you are pursuing seo for dentists for your website, to ensure you are remaining legal.

Speaking of, are you looking to grow your dental practice? If so, you might want to consider using some innovative digital marketing strategies such as SEO. To learn more about standing out from the competition in search engine rankings, take a look at this guide to SEO for Dentists.

Also, “buffing” ones credentials on the interest [or any other form of advertisement] may be considered a violation of certain advertising rules as set forth by a particular state dental board. If a dentist claims that they are a “nationally recognized expert in implant dentistry”, the advertisement may be concerned deceptive advertising.

The rule of thumb for dental advertising is that a dentist must be fully aware of their own state regulations regarding advertising, and every dentist should review the guidelines as set forth by the American Dental Association, even if a particular state has not adopted the ADA’s guidelines.

Simple Estate Planning for Dentists

Statistically, seventy percent (70%) of all dentists will die without a Will, and that number could be higher for dentists who fail to implement tax saving strategies during their lifetime. A failure to plan could directly affect the amount of estate taxes your estate may be required to pay to the IRS, and the amount of taxes you may be required to personally pay on a yearly basis. In some cases, estate taxes may be substantial.

Outlined below is essential estate planning and tax information you need to know today, so you can plan for tomorrow.

  1. Make a Will. You should state precisely who will receive your property at the time of your death [i.e. spouse, children, etc.]. If you have minor children you should appoint a guardian for your children. By preparing a Will, you not only plan for the distribution of your property, but you also plan for your children’s future.
  2. Consider a trust. There are two kinds of trusts, an Irrevocable Trust and a Living Trust. An Irrevocable Trust may be used for a variety of reasons, such as to avoid potential estate taxes, as well as asset protection. If you need to Buy a million dollar life insurance policy, one of the easiest ways to avoid estate taxes on your life insurance proceeds is to establish an Irrevocable Life Insurance Trust [ILET]. A properly prepared life insurance trust may protect your life insurance proceeds from estate taxes. It is worth talking to someone like PolicyMe about your options. A living trust is used to control your property while you are living, and also to avoid probate.
  3. Make health care directives. By creating a healthcare directive, you will be able to set forth in writing your healthcare wishes and intentions. Unless you outline in writing your healthcare wishes and intentions [life support, coma, vegetative state], someone other than a loved one may be forced to make life and death decisions for you and get multiple quotes of different insurance companies.
  4. Make financial power of attorney. A general power of attorney will allow you to appoint a trusted person to handle your finances if you are unable to do so yourself. This is completed using the lasting power of attorney forms that are required by the local authorities. If you become incapacitated or disabled, who has the authority to handle the day to day operations of your dental practice?
  5. Protect your children’s property. If you have minor children, you should appoint a trustee in your Will [or Trust] to handle the disposition of your children’s property in the event of your death. If you fail to plan, your children may receive a substantial amount of property [land, dental practice, etc.] when they turn 18 years old. How long would $500,000.00 last in the hands of an 18 or 20-year-old? Your Will [or Trust] should state what age(s) you wish your children to receive their property (21, 25, 30, etc.)
  6. File beneficiary forms. If you have a bank account or investment account, you may be able to designate a beneficiary for those accounts. Many bank and investment accounts are “pay on death accounts”, which will allow the funds in such accounts to be paid directly to your designated beneficiary. In most cases, “pay on death accounts” are excluded from the probate process.
  7. Consider life insurance. If you have substantial assets (home, investments, dental practice), you must have life insurance. However, in order to avoid estate taxes (which may be as high as 51% of your estate), you should consider establishing an Irrevocable Life Insurance Trust. If you are considering purchasing life insurance you’re going to be wanting to look into what the best policy could be for you.
  8. Understand estate taxes. If you have accumulated any type of assets whatsoever [house, bank account, investments, life insurance and especially a dental practice], you must take the necessary steps in order to reduce your estate taxes. You have worked hard all of your life, and if you fail to plan, your family may lose everything.
  9. Protect your business. If you are the sole owner of a dental practice or have a partner, you must have a business succession plan. A succession plan should specifically outline what happens to your dental practice or your ownership interest in the dental practice at the time of your death. If you have a partner, you must have a Shareholder’s Agreement.
  10. Store your documents. In order to ensure a smooth estate planning transition, the following records should be easily accessible: Will, Trusts, Insurance policies, Real estate deeds, Certificates for stocks, bonds, annuities, Information on bank accounts, mutual funds, and safe deposit boxes, Information on retirement plans, 401(k) accounts, or IRAs, Information on debts: credit cards, mortgages and loans, utilities, and unpaid taxes.

As the owner of a dental practice, you constantly deal with the day to day pressure [accounts receivable, employee problems, marketing, patients, etc.]. In the rough and tumble world of dental practice management, don’t forget to manage your own estate.