Adjustment Slop: The Money Leak Nobody's Looking At

A huge amount of dental practice revenue doesn’t disappear because patients refuse to pay or because insurance “just won’t cover it.” It disappears because someone clicks an adjustment code and the money evaporates without a clear name, a written policy, or a second look. That quiet leak is what I call adjustment slop, and once you learn to spot it, you won’t be able to unsee it.

We start by separating two concepts that too many offices blur together: write offs versus adjustments. Write offs are contractual and tied to your PPO fee schedule. Adjustments are choices, like courtesy discounts, employee perks, hardship cases, marketing promos, or quick “fixes” that make an awkward balance go away. When everything gets dumped into one generic bucket, you lose the story your data is trying to tell. You can’t manage what you can’t see, and you definitely can’t make smart decisions about participation, profitability, or team habits.

Then I walk you through the five types of adjustment slop I see when I take billing departments apart: habit adjustments, cover up adjustments that bury unworked claims, lazy courtesy with no authority, “corrections” that hide posting errors, and bad debt adjustments that happen before real collection steps. You’ll also get my teardown method you can do tonight: pull a 12 month adjustment report, sort by type, and ask one yes or no question for each label: is there a written policy behind this?

If you want your billing reports to be real management tools, not financial guesswork, hit play, pull your report, and start labeling money with intention. Subscribe, share this with your office manager, and leave a review if it helps you stop the leak.

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Transcript

SPEAKER_00 0:45

Hey friends, welcome back to another episode of the Dental Billing Podcast. I am your host, Erica Aguilar. Welcome back. If you are a loyal listener, and welcome, welcome, welcome to those of you that are new here. Stick around. We talk about all things dental billing, sometimes life, but my goal here is that you learn something every time you listen to a new episode. Now, today we're gonna talk about something that is quietly costing dental practices a fortune. And almost nobody is looking at it. We've all heard the term AI slop. We've seen it. We know when someone has used AI to create a useless video that we watch, but

Welcome And The Hidden Leak

SPEAKER_00 1:31

nobody really cares about, and it's all over the place. Here is the thing Billing has had slop long before AI ever gave it a name. If you were with me last week, you heard me say that there is such a thing as a sloppy claim. Sloppy claims, missing narratives, missing diagnosis codes, the stuff that hands an insurance company a legit reason to issue a denial. Today I want to introduce you to Claim Slop's quieter and sneakier cousin. And I call it adjustment slop. And it's sitting in your practice management software right now. It is draining practices for it has been draining practices for years. And I promise you, once you learn to see it, you're almost never gonna be able to unsee it. There's a line I wrote in my dental billing toolkit that sums up this whole episode. Stop letting money disappear without a name. And that is what today is about. Before we dive into adjustment slop, let me tell you why this is the thing that I noticed. When I was a kid, I was that kid. I was the one that liked to take things apart. Forget baby dolls and Barbies. I would cry if you gave me anything like that as a gift. I wanted to take things apart. The remote controlled, I took apart a toaster, anything that had screws in it. I wanted to know how it worked. I wanted to basically pull it all apart, lay everything out on a table, and then figure out where every piece went. And then I would put it back together and hopefully it would actually work. This drove my parents absolutely crazy,

From Claim Slop To Adjustment Slop

SPEAKER_00 3:20

if I'm being honest. And friends, I grew up and I did the exact same thing, except now I do it to billing departments. That's what I do. I take billing departments apart, and I've done it hundreds of times over the years that I've been doing dental billing since 1998. I go in, I pull the whole thing open, I find where the money is leaking, and then I rebuild it so it actually holds. That's the lens for this entire episode. And adjustment slop, that's the thing I find almost every single time I pull a dental billing department apart. Here is a number I want you to sit with before we go any further. When I take a billing department apart and I look at how much of the practice's production disappears before they ever collect a single dollar, the answer, more often than not, lands somewhere between a quarter and a third of everything they produced. It's gone before collections even starts. Sit with that. A quarter to a third of production gone before you try to collect it. And I've seen worse. I've taken apart departments that were giving away close to half or more of everything they produced before anyone lifted a finger to collect. And I've seen the opposite too. I've seen tight departments that had this completely under control. But the common story, the one I see over and over again, is a quarter to a third walking right out the door. I have a philosophy. The philosophy is that we spend tons of energy and effort to get bodies through the door, right? New patients, but we let dollars walk right out the back door. And that happens every single day because we're not looking at our reports with the right lens. So we're gonna talk about that. And here's why most doctors have no idea it's happening. It never shows up as a check that didn't come in. It really just shows up as nobody noticing that the money is that the money quietly went out the back door. It's not a bounced payment and there's no angry phone call. It just evaporates and everybody moves on to the next patient. So let's take this apart the way I would if I were sitting in your office. The first problem I run into almost every time, and I wrote about this mistake in the toolkit. Most offices treat write-offs and adjustments as if they're the same thing and they're not. And yet, many offices use one generic adjustment code for everything, like insurance write-off, PPO write-off, professional courtesy, employee discount. Everything gets lumped together into one bucket. And as a result, nobody knows where the money went. And friends, if you don't know where the money went, you can't manage it. So let's define

Write Offs Versus Adjustments

SPEAKER_00 6:31

these clearly. A write-off is contractual. It's the difference between your office's full fee, your UCR fee, and the contracted rate you agreed to accept from a PPO. As an example, that I use, your crown fee is $1,500. The PPO contracted fee is $1,000. That $500 difference is the write-off. And listen, the practice did not voluntarily discount that treatment. The practice contractually agreed to accept less money. It's structural. It's the contract that the doctor signed. An adjustment, friends, is completely different. It's a completely different animal. An adjustment is money the practice voluntarily chose not to collect. This is a business decision. It's not a contractual obligation. Employee discounts, family discount, professional courtesy, financial hardship, rapid pay discounts, refund corrections. The office chose to give up the revenue. And friends, here is the revealing piece. That's the one I go straight for when I take a department apart because write-offs are the contract, but the adjustments are the choices. Write-offs tell me what the insurance company decided. Adjustments tell me how your billing department actually thinks. The habits, the well, we've always done it that way. The front desk making an awkward balance disappears so they don't have to have a hard conversation and explain that balance to the patient or to their employer, the doctor. That, friends, is where the slop lives. So when I pull that adjustment report and put it on the table, here's what I'm actually hunting for. There are five kinds of adjustment slop, and I'm going to name each one so you can go and find your own. The first one is going to be the habit adjustment. This gets applied because it has always been applied. Nobody really knows how it started or why. And if you ask the team why we take this off, and you get a shrug, or you get that's just how we do it, friends, that's how we do it, is not a policy. It's a leak. And you need to change the lens in which you are viewing that adjustment. Number two is the cover-up adjustment. This is the one that I see the most. This is a big one, and it's it ties straight back

Five Types Of Adjustment Slop

SPEAKER_00 9:19

to last week's episode. This is when somebody writes off a balance instead of working the claim. The claim got denied, and instead of appealing it, instead of picking up the phone, somebody made that balance disappear with an adjustment. And I need you to hear this. That money was not uncollectible, it was unworked. The claim wasn't dead. Somebody decided to stop fighting for it and buried it in the adjustment column so it wouldn't show up as an open denial. Number three is the lazy courtesy. Discounts handed out with no policy behind them, no tracking and no authority. Everybody in the office is being generous and they're being generous with the doctor's money. Number four, the correction that isn't. Let me explain. Using an adjustment to paper over a posting error instead of actually fixing the posting. The books balance at the end of the day, everybody feels fine, but the truth is not the truth. The truth is gone. You can no longer trust what your own numbers are telling you. And finally, number five, the bad debt adjustment. Creating an adjustment when it should have gone to a payment plan or a statement should have gotten sent, or maybe we needed to send this patient to collections, giving up before you actually tried. Go pull your adjustment report. And I promise you're gonna see two or three of these staring right back at you. Because when I take a billing department apart and I review the adjustment report and I ask questions, rarely do I get solid answers around why adjustments were made, which is why then we create decision-making space for the front office who is responsible for the adjustments. How much can they adjust? When do we need to bring this to the doctor's attention? Are we talking about adjustments inside our monthly billing meetings? Those are very important things to review because, again, adjustment slop is real. Now I want to be clear about something because you know me. Everything I'm telling you today comes from taking these departments apart with my own two hands hundreds of times over the years of doing this work. This is not theory, friends. This is what falls out onto the table when you actually open up one of these departments and take a deeper look. And on the write-off side, I have a rule that I teach. And I also mention it in the toolkit. Every practice should know its overall write-off percentage. And as a general rule, I start to get concerned when the total PPO write-offs climb past 40% of gross production. Now, that doesn't automatically mean that we need to terminate our contracts. It just means that we need to dig deeper and do more investigation, asking questions like which plans are creating the biggest write-offs, which plans have the lowest reimbursement, which plans actually bring patience, and which plans just bring headaches. Data tells the story, friends. So here

Tracking Write Off Percentage

SPEAKER_00 12:46

is the real trap. You cannot calculate that number, that write-off percentage, if everything is dumped into one generic write-off, which brings me now to the fix. One of my favorite sayings, and I say it all the time throughout the toolkit, is this every dollar deserves a label. When money leaves the practice, we should know why. And the more specific your labels get, the more valuable your reports get. I want you to remember we are building a billing department that operates like a business within a business. Businesses track things like expenses, losses, trends, and they make decisions based on that data. Your billing department should do the exact same thing. So in the toolkit, I break this into real usable labels, and I want to walk you through some of

Every Dollar Deserves A Label

SPEAKER_00 13:44

those categories. On the write-off side, the easiest place to start is your PPO contracts. Your biggest payers deserve their own write-off category: Delta Dental PPO write-off, delta premiere write-off, Cigna PPO write-off, MetLife PPO write-off, Aetna, Guardian. The insurance companies that make up the majority of the insurance income should have their own write-off. In fact, every insurance plan that you accept should have its own write-off label so that at the end of the year you can see which insurance company you had the largest write-off percentage with. And then you can ask yourself, is it worth it to stay in network with this plan that I'm writing off 60% of my full fee? Now, on the adjustment side, this is where it gets good because these are the intentional decisions. In the toolkit, I group them so nothing hides. Employee related, things like employee discount and staff appreciation, family and friends like professional courtesy and VIP courtesy, financial hardships like charity care and veteran courtesy, marketing like new patient promotion and social media promotion. You can be more specific and say TikTok promotion, Instagram promotion, collection related labels like rapid pay discount and cash payment discount, billing corrections like posting error correction and duplicate payment correction, clinical courtesies like remake courtesy and treatment warranty labels, and insurance related and this one matters, insurance underpayment courtesy and fee schedule correction. Every reason the office chooses not to collect money gets its own name because a bucket called adjustment is not business management. It's just creating more financial guesswork. And that really can cause a problem when we're trying to make bigger business decisions. Okay, in the toolkit, I also include some labels that I do not actually recommend you put into your practice management software. But come on, friends. I use them in training because sometimes humor just creates more awareness. And these expose the real reasons offices give money away. So let's have some fun with this. Here's some of the ones I've literally seen in a practice management software. So I want you to listen and tell me if any of these hit close to home. The we felt bad adjustment, the oops adjustment. Yes, I've seen that. The somebody forgot to collect adjustment, the should have been collected at checkout adjustment. And my personal favorite is the hope is not a financial

Funny Labels With Real Consequences

SPEAKER_00 16:50

arrangement adjustment. And it keeps going. The we didn't want conflict adjustment, the front desk panic adjustment, the doctor said yes again adjustment, the patient was really nice adjustment, and learned an expensive lesson adjustment. Here's what I love about this. Line them up to the five types of adjustment slot I gave you earlier. And they're the same thing wearing a funnier hat. The front desk panic adjustment and the we didn't want conflict adjustment, that's your cover-up. The doctor said yes again, that's your lazy courtesy. With no authority behind it, by the way. Somebody forgot to collect and should have been collected at checkout, that's the bad debt. And hope is not a financial arrangement adjustment, friends. That is a whole billing philosophy problem in one label. Sometimes the truth can be funny, but the reality is the truth is expensive. Here's where adjustment slop becomes a bigger problem because you know I always bring everything back to patient advocacy. Every dollar you just adjust away without examining is a dollar that you never made the insurance company accountable for. I want you to look back at that adjustment category I mentioned, insurance under payment courtesy. Think about how backwards that phrase actually is. Some of what your office is filing under adjustment is not a courtesy at all. It's an insurance company paying you less than your contracted rate, and your office just accepting it and burying it and hiding

Patient Advocacy And Insurance Underpayment

SPEAKER_00 18:36

it behind an adjustment. There is one takeaway I want you to have from this episode. This is more than the cost of doing business, because we all try and justify the cost of doing business, but this is an unnecessary cost of doing business. This is just not looking at this report with the right lens. Knowing your numbers, knowing your contracts, knowing what actually agreed to get paid, that is how you stop volunteering and giving money away. That's the difference between a billing department that reacts to whatever the insurance company does and a billing department that holds the line. You are a patient advocate, and part of advocating for that patient is making sure that the practice collects what it's owed for the care that the patient received. It's all connected. So let me hand you the teardown method, friends, something you can do tonight. Step one, pull your adjustment report for the past 12 months, not your write-offs, your adjustments. Step two, sort it by type. Step three, for every adjustment type on that report, ask one yes or no question. Is there a written policy behind this adjustment? Every single no is a candidate for adjustment slop. Step four, separate the contractual from the discretionary so you can finally see them apart. Step five, rebuild your labels using real labels. Who's allowed to make

The Teardown Method You Can Do Tonight

SPEAKER_00 20:17

an adjustment, up to how much, and requiring what documentation. If you want the full label list to build from, the categories, the insurance, write-off labels, and even the funny ones for your next team training, it's all in the write-offs and adjustments chapter of my dental billing toolkit. The link is in the show notes. That's the exact teardown method that I use when I work one-on-one with an office when and we are taking apart the billing department and finding leaks and putting it all back together so it holds. So here's what I want you to take out of this episode. I want you to hear this loud and clear, okay? AI slop, we can all laugh at and scroll right past. Adjustment slop is something you are funding every day out of your own production. Write-offs are the contract, adjustments are the choices, and every dollar deserves a label because when money leaves your practice, you should know exactly why. Go pull your adjustment report tonight. I promise you're gonna find something on there that you cannot explain. And when you're staring at some adjustment that nobody can give you a reason for, you're going to understand exactly why I can't stop taking these departments apart. And friends, if this showed you that your adjustment column is a mystery, that nobody in your office can tell you what's in it or why, that is exactly the work I do. Book a billing consultation with me and we'll take apart your billing department together and find out where it's leaking. The link to schedule a consultation is in the show notes, or you can email me at hello at dental billingdoneright.com and we'll hop on a call. I hope this episode opened your eyes. I hope you learned something new today. Until the next episode, keep learning, stay great, and I will see you then. Bye for now.