Patient Financing Options

Guidelines for Practice Success | Managing Finances | Revenue

Sometimes the cost of a patient’s treatment plan is higher than the patient expected, even with the cost-sharing available through their dental benefit plan. Patients who don’t budget for dental treatment may have concerns about costs that may cause them to postpone treatment or to decide against it.

Many practices offer internal or external programs to help patients finance treatment. Knowing there are options to financing dental care often increases case acceptance rates and can significantly reduce the amount of time patients need to make a decision about proceeding with treatment.

When managed properly, financing programs make good business sense for your patient and your practice. Regardless of which approach you take, it’s important to be selective about which options you offer to which patients.

It’s also important to be aware that certain financing programs could result in the practice being considered a “lender,” especially if in-office payment plans offer patients more than 90 days to settle accounts. Complying with truth and lending regulations, which exist at both the federal and state levels, can be an arduous and complex process. For these and other reasons, many practices opt to out-source financing and payments to a third party.

Make sure you adequately educate your staff about the benefits and requirements of any financing options available in your practice.

It’s also prudent to develop and follow a written policy that details the options available and the protocols for having financing discussions with patients.

Any payment option offered through your practice should meet the needs of your patients. After all, the reality is that for many patients, the decision to proceed with dental treatment comes down to how much they can afford to pay. While any financing options you offer should respect your patients’ financial commitments, you also have to ensure that you can meet your overhead expenses.

Finally, remember that patients’ financial health can change unexpectedly. Patients who didn’t need to finance treatment in the past might need to do it today. And some patients may want to finance treatment for what many might consider “modest” out-of-pocket costs.

Internal Financing

While you might want to do everything you can to help each patient cover the cost of treatment, in-office financing should not necessarily be offered to every patient. Criteria to consider before discussing this option include your relationship to the patient, the patient’s ability to pay, payment history, the type of work being done, and the value of the treatment plan. Managing a financing program can require a significant amount of time so make sure your designated staff has sufficient time to be certain that payments are credited to the correct accounts.

It’s a good idea to review Regulation Z of the federal Truth in Lending Act (TILA) for more information about dental offices as creditors. A link to that information can be found under Additional Resources.

Any dental practice considering implementing an internal financing plan must make certain that the plan is properly structured and in full compliance with all applicable laws and regulations that relate to consumer financing transactions.

Have a knowledgeable attorney in your jurisdiction who specializes in consumer finance regulations review all documents and information relating to the plan before offering or promoting it to patients; this will help ensure that the practice plan is in compliance with all federal and state lending laws.

Consider these questions when creating a finance plan:

  • Who is the lender? Is it the dental practice or a third party lender? Using a third party lender may offer the benefit of being able to bypass the need to implement systems to comply with state and federal regulations since the third party lender will do that for you. At the same time however, it can also deprive the practice of the opportunity to earn the interest and fees that go along with being a lender. The opportunity to compensate for delayed patient payment through interest charges is often a key driver that prompts dental practices to create patient finance plans.
  • What regulatory issues should be considered before creating a financing plan? A few things to do early on in the process include:
    • Researching federal and state laws and regulations that relate to patient financing plans
    • Determining if your state requires a license to extend credit
    • Ensuring that any fees charged to patients comply with applicable state laws
    • Implementing systems to make sure that proper disclosures are made in accordance with state and federal law. Failure to properly disclose the terms of a consumer finance transaction can result in serious fines and penalties.
  • What elements should you include in your financing plan? While it’s recommended that you have a knowledgeable attorney in your jurisdiction who specializes in consumer finance regulations assist you in identifying the components of a financing agreement, you should include the following elements in any patient financing plan:
    • An outline of the structure of patient finance agreement
    • The required financial and disclosure documents
    • The interest fee(s) to be charged and documentation confirming that the necessary controls are in place to make sure the appropriate fees are charged
    • Written plans for implementing the procedures and policies relating to your patient financing plan to ensure that:
      • The practice is in full compliance in all steps of the financing process
      • Staff is properly trained on how to prepare disclosure and finance documents
      • Record keeping and all finance documents are maintained as required by law

External Financing

Many external, third-party financing options involve an outside company issuing the patient a credit card that can be used to pay for health care services only.

Make sure you fully understand how this type of financing program works before signing any agreement that directs patients to a particular company or service for external financing. And be sure to pay careful attention to the section of the contract that details how you will be reimbursed over time for treatment rendered.

While the guidelines for these plans usually allow for pre-approval of financing, the providing dentist should submit charges when a procedure is performed. To be consistent with other third party payment plans, charges should be submitted according to the provisions of the contract, since many financial agreements specify how and when patient payments are made and require that the entire process be appropriately documented.

Dentists who sign up to offer external financing programs should make sure that everyone on staff is educated about the program, including how it works, its limitations, and its payment terms.

Since this option is likely to be a brand new concept to your patients, they’ll appreciate getting the information from your staff, whom they already know and trust. Money and personal finances are sensitive subjects. Discussing financing options with patients can be challenging since everyone approaches conversations about money with some bias and trepidation. It’s important these discussions take place comfortably, naturally and in a non-judgmental way. Doing them in a private, comfortable, calming environment like a quiet office also helps. Have your staff “role play” various financing discussions by practicing with each other during staff meetings. This will make them more comfortable talking with patients and will prepare them for any questions that might arise.

Download the “Paying for Your Dental Treatment” brochure from the Additional Resources of this module and share this easy-to-read FAQ with patients looking for options to financing their care. This brochure can also be downloaded and customized with your practice’s contact information so it can be given to patients to take home for review.

A Note on Related ADA Policies

The ADA maintains a policy regarding payment for prosthodontic treatment that encourages all third-party payers to recognize the preparation date as the date of service, that is, payment date, for fixed prosthodontic treatment, and to recognize the final impression date as the date of service, or payment date, for removable prosthodontic treatment.

The ADA maintains similar policy regarding endodontic treatment that encourages third-party payers to consider the completion date as the date of service, that is, or the payment date, for endodontic therapy.

Additional Resources:

After you download the brochures, you can customize the back panel with your contact information. Simply open the file, navigate to the address panel and type your information in the fields provided. Click Save and you're done! Then print and pass to your patients.