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Why Haven’t Insurance Reimbursement Rates Increased?

  • Writer: Kathryn J
    Kathryn J
  • Jul 11
  • 2 min read

Updated: Jul 15


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Many dental practices wonder why, despite rising costs in materials, wages, and overhead, insurance reimbursement rates seem stuck—or in some cases, shrinking. The answer lies in the business model of dental insurance itself, which has evolved not to reward care providers, but to protect the profitability of the insurer.

Historically, insurance companies profited in two key ways: float (the money held before paying out claims) and underwriting (the difference between premiums collected and claims paid). Today, float has become less of a factor. Claims are processed faster than ever, reducing the amount of time insurers can earn interest on unpaid claims. As a result, insurers have had to rely more heavily on underwriting profits—essentially, by reducing payouts through lower reimbursement rates, claim denials, and tighter policy enforcement.


For the plans that do pay quickly or offer higher reimbursement rates, profitability is still preserved. How? These plans come with built-in cost containment: low annual maximums, strict coverage exclusions, frequency limitations, and narrow definitions of what’s reimbursable. Even if they appear more generous upfront, the fine print caps what patients can use—keeping insurer risk low.


Additionally, insurers manage profitability by targeting healthier, lower-utilization patient pools, often in employer-sponsored groups. Auto-adjudicated claims (those processed automatically without human review) allow them to operate with leaner administrative costs. And in some cases, dental plans are treated as loss leaders—used strategically to win business in other insurance lines like medical, vision, or disability.

The end result: stagnant or falling reimbursement rates, while insurance companies continue to optimize profit through operational efficiency and benefit design. For dental practices, this means profitability must be protected elsewhere—through strong payor analysis, fee schedule management, and a clear understanding of which procedures and plans actually deliver value


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