Making sure patient payments are properly allocated to the correct family members, procedures or adjustments ensures that patients’ account balances and reports are accurate. In this post, we’ll review some best practices.

Allocation Preferences

In Setup > Account > Allocations, your office can set various preferences that determine how Open Dental allocates patient payments.

We suggest using the Rigorous Line Item or Default buttons to automatically set various preferences in the window. Simple is not generally suggested as this will not attach patient payments to procedures or adjustments; this affects reports and should only be used by offices not paying providers on collections.

You can change preferences manually as well. We suggest setting Paysplits to Rigorous or Auto-Split. Doing so will ensure Open Dental creates payment splits (paysplit) going to unpaid procedures or adjustments when users create a patient payment. See Creating a Payment below for more information.

Creating a Payment

When the Paysplit preference is set to Rigorous or Auto-Split, Open Dental uses a FIFO (first in, first out) logic to select the production (procedures or adjustments) to pay off using the payment. This means that the oldest production with an outstanding patient portion get paid off first. Open Dental will also only create a paysplit that matches the outstanding patient portion.

This means if a $236 procedure has an outstanding insurance estimate of $100 payment and $71 write-off, and the patient has already paid $50, Open Dental will only create a paysplit of $15.

Any remaining money will be split to other production on the family account, until the total payment is accounted for.

Selecting Production

When taking a payment, you may not always want the money to go to the oldest production on the account. Maybe you’re waiting on a resubmitted insurance claim and don’t have a good estimate or maybe the patient specified the funds go to a certain procedure, whatever the case, it’s easy to allocate a payment to specific production.

In this example, our patient has outstanding balances on procedures from 3/31/22 and 8/1/22. They would like to make a payment of $20.80 to go towards the D4910 on 8/1/22. If we just clicked the payment button, Open Dental will allocate FIFO and the payment will attach to the D4341 from 3/31/22.

To attach the payment to the D4910 instead, all we need to do is highlight the procedure from the account before clicking the Payment button.

Once the Payment window is open, the Current Payment Splits will reflect the procedure we select, rather than the oldest procedures on the account. Proceed with taking the payment as you normally would.

This process can be done with a single procedure or multiple production items. Click and drag or Ctrl + click in the account module to select multiple items before clicking the payment button. If the payment amount exceeds the total outstanding balance of the selected item(s), any remaining payment will be distributed to unselected production using the FIFO logic.

Prefer This Patient

Other times you may need to apply a payment to a specific family member, but you may not necessarily need or want to apply the payment to specific production. Select the patient whose balance you would like to pay and click Payment. In the enter amount window, check Prefer this patient.

This will allocate the payment to the selected patient’s outstanding balance before any other family members, regardless of whether other family members have older balances. The outstanding balances on the selected patient’s account will be paid FIFO.

If the payment amount exceeds the selected patient’s outstanding balance, any remaining payment will be distributed to the other family members using the FIFO logic.

Income Transfers

From time to time you may need to move payments, be it from a procedure that got overpaid or moving a credit from one family member to another. This should always be done with an income transfer. See the Income Transfer page in our manual for instructions on how to complete income transfers for different scenarios.

You can also enable the Allocation preference “Make claim specific income transfers when received” to automatically transfer any patient overpayment once an insurance claim is received. This can be set to always occur in the case of patient overpayments or only when Rigorous Paysplits is enabled.

Prepayments and Unearned

At times you may need to take a payment for which there is no procedure or adjustment to attach to the payment. Be it a prepayment or an overpayment, these can be entered as unearned income. See our Unearned/Prepayment manual page for instructions on entering these payments. Also read our previous blog post: Best Practices for Accepting Prepayments. Unearned income can be allocated to treatment planned procedures or be assigned to a specific unearned type (e.g., prepayment) to easily track and manage unearned income

Allocating your patient payments accurately will ensure that your patients know where their outstanding balance is coming from and also makes sure that your reports are accurate. Reports like the Production and Income Report, Daily Payments Report, Unearned Income Reports rely on payment allocation. It’s especially important to make sure these reports are accurate if your practice pays providers on collections (income).

If you ever need help or have questions with patient payment allocation, contact our Support Team.