Forgiven Copayments, Patient Termination, Charging Interest and Fees

Forgiven Copayments
The American Dental Association Code of Ethics states that it is unethical conduct for a dentist to accept a third party payment under a copayment plan as full payment without disclosing to the third party that the patient's portion will not be collected. This is overbilling, according to the Code.

The reason for the focus on abrogation of copayment is the misrepresentation of fees it represents. Imagine that a procedure's fee is $100. The insurance plan pays 90 percent of the dentist's fee and the patient is obligated to pay the remainder. When the dentist waives the copayment, he or she is actually charging only $90. The dentist should then collect only $81 from the insurance plan (90 percent of the fee charged). Instead, by collecting $90, he or she has collected 100 percent of the fee actually charged but the insurance company does not realize it. In this case the dentist is in violation of both the ADA Code of Ethics and of state law.

To avoid this difficult situation, dentists are advised to report what they charge the patient as their fee.

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Patient Termination/Avoiding Abandonment
Occasionally a dentist will have reason to withdraw responsibility for a patient of record.

Once a dentist-patient relationship has been established, the dentist has a legal duty to treat a patient until the relationship is terminated. Consequently, patients may bring charges of abandonment against a dentist if the patient has suffered an injury due to the dentist's failure to continue to perform his/her duty to treat the patient.

The dentist-patient relationship can be terminated only by:

  1. cessation of the necessity which gave rise to the relationship;
  2. discharge of the dentist by the patient; or
  3. the dentist's withdrawal of the patient.

Dentist termination of patient
If you decide to terminate the relationship, it is prudent to notify the patient, in writing, through the mail with a certified letter, return receipt requested stating the following

  • Indicate the date the relationship will end
  • Suggest how to find another dentist
  • Offer to forward records to the patient's new dentist or anywhere else the patient might want records sent.
  • Offer to provide emergency and interim care to the patient for a reasonable period of time.
  • Indicate current status of care and future need for treatment.

The dentist must continue to see and treat the patient until the patient can find another dentist and a smooth transition can be accomplished.

Patient termination of dentist
If the patient ends the relationship, you should:

  • Document the patient's decision in your dental record
  • Advise patient in writing of incomplete treatment plans
  • Recommend continuation of unfinished treatment
  • Offer to forward records to the patient's next dentist

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Charging Interest and Fees
Proper charging of interest and fees on patient's statements can be confusing and disturbing to the patient. A dentist may charge interest on unpaid balances as long as the interest rate does not exceed the State Usury Law of 21 percent per month, and late fees, missed appointment fees, billing, and re-billing fees are not allowed unless specifically set forth in the terms of engagement or provided by a contract between the dentist and patient. For missed appointments, the dentist should incorporate a waiver clause for unavoidable cancellations caused by family emergencies, etc.

Rhode Island law provides that interest in all business transactions is "at the rate of twelve dollars ($12.00) on one hundred dollars ($100.00) for one year, unless a different rate is expressly stipulated." [Section 6-26-1. Legal rate of interest.]

However, you may enter into an agreement with a patient to charge up to 21 percent per year. You may not charge over 21% interest. The penalties for charging over 21 percent are severe under the state's usury law. [Section 6-23-3 Usury] They include voiding the contract and imprisonment for up to five years.

Finally, before entering into agreements with patients, be sure that the charges incorporated are not banned by the terms of the provider agreement with the patient's dental insurance plan.

Whenever a dentist wishes to institute a charge which will be assessed against a patient, this charge, and a clear explanation of it should be communicated to the patient and included in the terms of engagement or provided in a contract. The following steps can help dental offices comply with state usury laws:

  • Incorporate any terms relating to interest and fees in the patient's terms of agreement or contract at the beginning of the dentist-patient relationship.
  • Charges should be posted in the office, and made clearly visible to patients.
  • A statement of interest and fees should be printed on billing statements.
  • Cancellation fees should be printed on appointment cards.
  • Do not charge illegal interest rates.
  • Update patient's dental record annually to include the terms of payment, and interest and fees.
  • Do not include interest or finance charges in principal amounts when computing interest on customer accounts or when assigning accounts for collection.
This information is provided as some guidance for complying with state usury laws. Although it refers to state regulations, it is not, nor is it meant to be, legal advice. For specifics, the dentist should consult a personal attorney, or an accountant.

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Rhode Island Dental Association
875 Centerville Commons, Bldg. 4, Suite 12 | Warwick, RI 02886
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