How to reconcile dental insurance payments
To reconcile dental insurance payments, make three matches for every payment: the bank deposit to the ERA or EOB that explains it, each claim on that remittance to its posting in your practice management system, and the deposit to its entry in the books. Then name every difference, such as a recoupment, a fee or a payment never posted, and give it an owner.
Book a demoBy the ScoutIQ AI teamPublished 8 min read
Key takeaways
- Every insurance payment takes three matches: the bank deposit to the ERA or EOB that explains it, each claim to its posting in your PMS, and the deposit to its entry in the books.
- Match an EFT by its trace number, a paper check by its check number, and a virtual card by the processor payout and its fee.
- Recoupments and card fees each go on their own line. Split payments and short pays each get a name and an owner. None of them is netted away.
- A deposit that reached the bank but was never posted is money missing in plain sight. Look for it every day, not at month end.
- Money nobody can identify is held as an unidentified credit until someone names the sender. It is never spread across patients.
What insurance payment reconciliation is
Insurance payment reconciliation is proving that every dollar a payer sent reached the bank, was posted to the right claims and was booked. A payer rarely pays one claim at a time. One EFT or check usually pays many patients, sometimes minus money the payer is taking back, and the bank line shows only a payer name, a number and one total.
What explains that total is the payer’s remittance advice: the ERA, or 835 file, for electronic payments, and the paper EOB for checks. Reconciling ties the remittance to the bank on one side and to your practice system and books on the other. It is the insurance half of dental bank reconciliation; patient payments are the other half.
The three matches
Every insurance payment is reconciled when three things agree. Skip one and the other two can look right while the money is wrong.
| Match | What you compare | The proof |
|---|---|---|
| 1. The deposit to its remittance | Each bank deposit against the ERA or EOB that explains it | The trace number for an EFT, the check number for a paper check, the processor payout and its fee for a virtual card |
| 2. Each claim to its posting | Every claim on the remittance against what was posted in your practice management system | The payment and write-off posted to the right patient, procedure and location, at the amount the payer paid |
| 3. The deposit to the books | The bank deposit against its entry in your accounting system | One entry per deposit, at the amount the bank shows, with fees and recoupments on their own lines |
Count the records instead of the matches and you have four-way reconciliation: the remittance, the posting, the bank deposit and the books. Proving the books side is GL reconciliation. Trace numbers only work when the payer sends both the EFT and the ERA; see EFT and ERA enrollment.
When the deposit and the claims do not agree
Most of the work is in the payments that do not tie out on the first try. Each kind has a cause and a fix, and none of them is solved by changing a number until it agrees.
| What happened | What you see | What to do |
|---|---|---|
| Recoupment or offset | The payer takes back an earlier overpayment from today’s payment, so the deposit is smaller than the claims on the ERA | Book the full payment and the recoupment as its own negative line, tied to the earlier claim it takes back |
| Virtual card fee | The processor pays out the virtual card net of its fee, so the deposit is smaller than the EOB | Book the full payment, with the fee on its own line as an expense |
| Split payment | One remittance paid in more than one deposit, or one deposit that pays several remittances | Match every deposit to its part, and check that the parts add up |
| Partial payment | The deposit matches its ERA, but a claim on it was paid short or denied | Post what was paid with the payer’s reason, and send the short pay or denial to someone to work |
| Payment never posted | A deposit in the bank with no posting behind it in the practice system | Post it to the right patient and claim the same day |
| Money nobody can identify | A bank credit with no remittance, payer or patient behind it | Hold it as an unidentified credit until someone names the sender. Never spread it across patients |
Virtual cards have their own page: virtual credit card payments, and how to ask payers for EFT instead. A short pay that no code explains is covered in how to find dental insurance underpayments.
How to reconcile, step by step
Gather the bank lines and the remittances
Each day, pull every credit that landed in the bank, with its date, amount, payer name and trace or check number, and every ERA, EOB and virtual card notice that arrived.
ERAs come from the clearinghouse, paper EOBs come in the mail with their checks, and some payers only put remittances on their portals. Keep them in one place, so nothing is matched from memory.
Match each deposit to its remittance
Start with the strongest proof: a trace or check number on the bank line that equals the one on the remittance.
When there is no number, an amount, date and payer that fit only one bank line is a strong match. Anything looser, such as a payer alias or a small difference, is a proposal for a person to accept, not a match.
Check every claim against its posting
For each claim on the remittance, confirm the payment and write-off are posted in your practice management system, to the right patient, procedure and location.
If the claims on a remittance do not add up to its deposit, find out why before you book it: a recoupment, a fee, a split payment or a claim that was never posted.
Book each deposit once
Record each bank deposit at the amount the bank shows: the full payment, with fees and recoupments on their own lines, by location.
Booking only the net amount makes collections look smaller than what the payer paid and hides what the fees cost.
Give every difference a name, an owner and a date
A deposit with no remittance, a remittance with no deposit and a claim paid short each go on a list with a person’s name next to them.
Nothing is plugged to make a number agree. A difference with a name and a date is an open item; a difference without one is a mistake.
Checks and paper EOBs follow the same steps once they are opened and logged; see posting paper EOBs and checks.
Daily, not only at month end
A difference found the day after it happens takes minutes to trace. Found four weeks later, it means digging through statements, remittances and ledgers, and some of it is never found. So match deposits every day as they land, and let month end be a review of the open items instead of a search.
Before you close a period, check:
- Every insurance deposit this period is matched to its ERA or EOB, or listed as an open item with an owner.
- Every remittance is matched to a deposit, or its payment is confirmed still in transit.
- Every claim on a matched remittance is posted in the practice system, at the amount the payer paid.
- Recoupments and virtual card fees are booked on their own lines.
- Short pays and denials are with someone to work, with the payer’s reason.
- Unidentified credits are held, never spread across patients.
- Whoever posted the payments did not approve their own bank match.
See month-end close for how the close is signed off.
Groups with several locations or entities
In a group, one payer EFT can pay several locations under the same tax ID, and payments sometimes land in another practice’s bank account. Reconcile each location against its own practice system and bank account first, then each legal entity, then the group. What one entity owes another is booked on both sides, as due to and due from, so the group nets to $0.00.
The three matches do not change. How the third one is booked depends on your accounting system: see how to reconcile dental deposits in QuickBooks and how DSOs reconcile dental deposits in NetSuite and Sage Intacct.
What it looks like at one practice
At Todaro Dental, one office on Open Dental running all three ScoutIQ modules, 178 of 185 electronic insurance deposits matched to the bank automatically, 98% of the dollars. The other 7, $4,358, had reached the bank but were never posted. That is the second match doing its job. Full numbers and method: Todaro Dental.
What to automate, and what to keep
Automate the matches that have proof: trace and check numbers, confirming every claim is posted, and booking each deposit with its fees and recoupments. Keep people on the calls that need judgment: accepting a looser match, working a short pay or a denial, and naming an unidentified credit.
When you compare software, ask two things. How does it decide a payment is reconciled? And does it show the proof behind each match? A close match accepted with no one looking is how a wrong posting reaches the books.
How ScoutIQ handles it
ScoutIQ matches every EFT, check and virtual card to the ERA or EOB behind it, and each claim to its posting in your practice system, every day as deposits land, on 59 practice management systems. Exact means the trace or check number on the bank line equals the one on the remittance. Strong means amount, date and payer agree and only one bank line fits. Only exact and strong matches count as reconciled; anything looser waits for a person to accept it. 95% of insurance payments match with no human review, and the rest are flagged with the reason rather than posted wrong. Unidentified credits are held, never spread.
Deposits, virtual card fees and recoupments are booked to QuickBooks Online, QuickBooks Desktop, NetSuite or Sage Intacct, each to its own location. With Xero, ScoutIQ reads the books and reconciles against them, and never books entries there. Patient payments are reconciled the same way: 99% of patient payments collected through ScoutIQ reconcile with no human touch. ScoutIQ does not submit claims, and most practices are live in 48 hours. See payment reconciliation.
ScoutIQ product
Insurance Billing Automation