Control Adjustments Before They Control You

Introduction: The Hidden Profit Leak

Every medical practice has adjustments—it’s part of doing business with insurance companies. But when those adjustments grow unchecked, they quietly eat away at profits, distort reports, and create unnecessary stress for your team.

The solution isn’t to eliminate adjustments—it’s to understand, structure, and control them. When you take command of your adjustments, your numbers stop creating confusion and start driving clarity.

The Two Types of Adjustments

All adjustments fall into two categories. Knowing which is which helps you separate what’s normal from what’s fixable.

Contractual Adjustments

These are the discounts you’ve agreed to with insurance companies. They’re built into your payer contracts and are part of the cost of doing business. They can’t be avoided—and they shouldn’t be feared. Think of them as the difference between your retail price and your contracted price.

Write-Offs

Write-offs are different. They represent avoidable revenue loss—money your practice could have collected but didn’t. Common causes include:

• Missing claim filing deadlines

• Coding or documentation errors

• Uncollected patient balances

When you separate contractual adjustments from write-offs in your reports, you’ll know which numbers reflect business reality—and which reveal preventable leaks.

When Adjustments Distort Collections and Bonuses

Adjustments don’t just impact your reports—they can also throw off your bonus structures and staff incentives.

In many practices—especially in dental and specialty offices—managers and key staff earn bonuses based on a percentage of collections. On the surface, that sounds fair and performance-driven. But if adjustments aren’t tracked or applied correctly, those collection numbers can be artificially inflated.

Here’s how it happens:

A dental office posts $150,000 in production for the month. Insurance adjustments—contractual discounts and write-offs—should total about $40,000.But if those adjustments are delayed or coded incorrectly, the system may temporarily show $150,000 collected against $110,000 actually received.

On paper, the practice appears to have collected 100% of its charges, and the manager earns a larger bonus. In reality, part of that “collection success” is simply missing adjustments—not true cash in the bank.

That mismatch causes two problems:

• Bonuses become detached from financial reality.

• Owners lose visibility into real collection performance.

The fix:

• Tie bonuses to net collections—the amount actually deposited in the bank.

• Require adjustments to be posted and reconciled before monthly reporting.

• Review adjustment trends alongside collection percentages each period.

When incentives align with reality, everyone wins—your team stays motivated, and your financial picture stays honest.

Set Clear Approval Rules

Not every team member should have the same authority to adjust accounts. A clear approval process keeps your data clean and your revenue protected.

Create a simple Adjustment Approval Chart like this:

Adjustment Amount	Approval Required
Under $50	Billing staff
$50–$200	Billing manager
Over $200	Provider or owner

This rule-based structure prevents unauthorized or accidental write-offs and ensures that only verified, necessary adjustments hit your books.

Stop the Timely Filing Problem

Late claims are one of the most common—and costly—sources of preventable write-offs. Every insurance payer has a filing deadline. If a claim misses that deadline, you don’t get paid. Period.

The fix:

• Run a “timely filing” report every week.

• Flag any claims nearing expiration.

• Submit them immediately and confirm receipt.

This 10-minute routine can recover thousands in otherwise lost revenue. Treat it like preventive medicine—small, regular steps that protect long-term health.

Reconcile Regularly

Your practice management system and your accounting software should always match. If they don’t, you can’t trust your numbers—and you can’t make sound financial decisions.

Spend 20 minutes each month on reconciliation:

• Match bank deposits to billing system totals.

• Verify all payments were posted correctly.

• Check for missing ERA files or duplicate charges.

That short monthly audit helps you catch small errors before they snowball into financial blind spots.

Present Care Plans the Right Way

Many practices try to offset adjustments by simply raising fees. That can backfire—higher charges often lead to higher contractual write-downs.

A better approach is to build more value into patient care plans by including beneficial, cash-based services that support outcomes and satisfaction.

For example, in a dental office, a patient might come in for treatment of chronic jaw pain. After reviewing imaging and confirming the diagnosis, the dentist might say:

“We’re going to complete your covered treatment first, but I also recommend adding a night guard to help protect your bite and prevent further discomfort. It’s not covered by insurance, but it’s an important part of your long-term care plan.”

When the dentist presents this as part of a medical recommendation—not a sales pitch—patients understand the value.Then your coordinator can handle cost and payment discussions transparently.

That approach improves patient outcomes, builds trust, and strengthens your Average Patient Charge—all without distorting your adjustment data.

Conclusion: Clarity Builds Confidence

Adjustments will always exist. They’re part of a healthy revenue cycle. But when you structure them clearly, approve them consistently, and review them regularly, they stop being unpredictable.

The result?

• Less confusion.

• More accuracy.

• Greater trust in your numbers.

Financial clarity isn’t about eliminating adjustments—it’s about controlling them. And when you do, your practice runs with confidence, precision, and profit.