Contracted Fee
Dental RCM Glossary
The pre-negotiated rate an in-network dentist agrees to accept from an insurance company as full payment for a specific covered service.
A contracted fee is the dollar amount that a dental provider has agreed to accept from an insurance carrier as full payment for a specific covered service under the terms of their network participation agreement. These rates are negotiated between the carrier and the provider or established by the carrier's standard fee schedule at the time of network enrollment. Contracted fees are typically lower than the provider's standard charges, and the difference between the two must be written off as a contractual adjustment. The provider is prohibited from billing the patient for this difference on covered services, making the contracted fee the effective revenue cap for each in-network procedure.
Contracted fee schedules vary significantly across carriers and plan types, even within the same geographic market. A dental practice may have ten or more active payer contracts, each with different reimbursement rates for the same CDT codes. The contracted fee for a specific procedure can differ by 20 to 40 percent between carriers, creating meaningful variation in the revenue generated from the same clinical service depending on which plan the patient carries. These fee schedules are typically updated on an annual or biannual basis, and providers should review updated schedules carefully to identify any reductions that could impact practice revenue.
For practice administrators and DSO operators, contracted fee analysis is a critical component of financial management. Comparing contracted fees across all active payer contracts for the practice's highest-volume procedure codes reveals which relationships are most and least profitable. This analysis supports informed decision-making about which networks to maintain, which contracts to renegotiate for higher rates, and which low-reimbursing plans may warrant termination. Practices should also ensure their standard fee schedule is set above the highest contracted rate across all payers, as submitting charges below the allowed amount results in the practice receiving less than the contracted maximum.
Why It Matters for Dental Practices
Contracted fees determine the effective revenue ceiling for every in-network procedure. Practices that do not regularly compare contracted fees across payers risk accepting below-market reimbursement on their highest-volume procedure codes.
Example
A dentist's standard fee for a crown (D2740) is $1,200. The contracted fee with Delta Dental PPO is $920, while Cigna PPO pays $860. The $280 to $340 difference per crown is written off as a contractual adjustment on each plan.
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