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My question is specifically about dental insurance, and I believe this is the right place to ask about it. If not, I would apologize.

I'm a student of an university whose dental clinic I frequent. I use a dental health plan provided by the university, and the clinic itself offers very affordable services. However, there are some intriguing aspects.

Let's say at a certain day they do 2-surface composite posterior for #03 and 1-surface composite anterior and 2-surface composite anterior for #10. The fee charged for #03 is $186, and the fee charged for #10 combined is $283. The total fee is $469. I understand this. Then, the insurance provider gives me the negotiated fees $140 for #03 and $150 for #10. This is before they cover the expenses, so they roughly cover 80% of $290. This means that I only have to pay $290 minus x instead of $469 minus y, and this negotiation doesn't contribute to annual maximum benefit. I've heard this both from the billing office of the clinic and the person from my insurance provider, and I wonder why negotiation can drastically lower the fee.

I understand that treatment at the same teeth (#10) should cost less, but I don't think that's the only reason, since if dentists can charge only half for each of two parts of the same teeth, they surely don't want to fix several parts of the same teeth at the same day. So, I suspect, conversely, that dental clinics sometimes charge the fee nearly twice to incentivize people to get insurances, especially their preferred ones. If this is the case, maybe my case is rather atypical, since my insurance has strong bond with this clinic for the obvious reason. Or is this typical? How about non-dental cases?

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    I'm voting to close this question as off-topic because the main focus of the question is dental billing practices – Nosrac Apr 27 '17 at 15:05
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I wonder why negotiation can drastically lower the fee.

The provider is much more certain about receiving payment. The provider doesn't want to negotiate with every patient and it wants less to track down patients for payment. An insured patient pays their fee to the insurer, and the insurer reliably pays it's portion of the fees to the provider. Yes, the insured patient generally still owes some portion of the bill but there will always be money coming in from the insurers.

Part of being included in the insurer's provider network is the agreed to discounted fee. Insurers generally wield a big stick in terms of member counts and that can result in large network discounts. Sometimes there are price anomalies like a provider tends to charge a lot more for a rear tooth than a front tooth while the insurer has a much smaller price delta on it's sheet, there's no consistent reason for discrepancies to exist.

Generally by being included in a network providers gain:

  • Advertising, they're listed on the provider's network
  • Simplified insurer billing, generally they receive direct access to a billing system which reduces paperwork
  • Reliable payments of the agreed to billable amounts

Generally by being included in a network providers lose:

  • Pricing authority on in-network patients
  • Autonomy to unilaterally approve services, some services may require preauthorization from the insurer to guarantee payment

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