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There are many ways to design a dental benefits plan. Although the individual features of plans may differ somewhat, the most common designs can be grouped into the following categories:

Fee-for-Service dental plans are typically freedom-of-choice arrangements under which a dentist is paid for each service rendered according to the fees established by the dentist.

Managed Care dental plans are health plans that integrate the financing and delivery of health care services to covered individuals by means of some or all of the following: arrangements with selected providers to furnish services to members; defined criteria for the selection of health care providers; financial incentives for members to use contracted providers; procedures associated with the plan, subject to limitations and exclusions.

Fee-for-Service Plans

Direct Reimbursement
Benefits in this type of plan are based on dollars spent, rather than on the type of treatment. Direct Reimbursement is a self-funded plan that allows patients to go to the dentist of their choice. Depending on the plan, the patient pays the dentist directly (or the benefit can be directly assigned to the dental office) and then submits a paid receipt or proof of treatment. The administrator then reimburses the employee a percentage of the dental care costs. With some plans there are no insurance claim forms to complete and no administrative processing to be done by the dental office or an insurance company. Direct Reimbursement is the ADA’s preferred method of financing dental treatment.

If you are considering a Direct Reimbursement dental plan, the following questions may
be addressed:

  • What co-payments and annual maximum should be established?
  • Will the plan be administered in-house or by a third party?
  • What records must be kept in order to comply with governmental regulations?
  • What percentage of the cost will go toward administration?
  • What safeguards and educational programs are in place to ensure that employees use their dental dollars wisely?
  • What protection is available or offered to the employer if utilization is higher than expected in any given year?

Indemnity Plans
An indemnity dental plan is sometimes called “traditional” insurance. In this type of plan an insurance company pays claims based on the procedures performed, usually as a percentage of the charges. Generally an indemnity plan allows patients to choose their own dentists, but it may also be paired with a PPO. Most plans have a maximum allowance for each procedure they refer to as “UCR” or “Usual, Customary or Reasonable” fees. A common misperception is that the terms Usual, Customary and Reasonable are interchangeable; they are not. Dentists determine their own Usual fees. The insurance company’s fee schedule is called Customary, but it may or may not reflect the fees that area dentists charge. Insurance companies usually do not disclose how their fee schedules are determined. Reimbursement is made according to the patient’s plan of benefits, usually a percentage of the insurance company’s fee schedule.

If the plan purchaser is reviewing an indemnity dental plan with Customary fee schedule, answering the following questions may assist in the decision-making process:

  • What data has been used to establish the fee schedule? Is the data source disclosed and is it easily accessible? 
  • How often are the fee levels updated? How are the updates communicated and to whom?
  • At what percentile of the payer’s Customary fee schedule is payment made?
  • What percentage of the premiums is used for administration or non-claim payment costs and not for dental care?

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Managed Care Dental Plans

Preferred Provider Organization (PPO)
A PPO plan is regular indemnity insurance combined with a network of dentists under contract to the insurance company to deliver specified services for set fees and according to the provisions of the contract. Contracted dentists must usually accept the fee schedule as dictated by the plan. Patients who see a non-contracted dentist may incur a greater out-of-pocket expense.

When reviewing a PPO dental plan, answering the following questions may assist the plan purchaser in the decision-making process: 

  • What percentage of the premium is used for administration or non-claim payment costs? Will the amount of the discount impact the patient’s freedom to choose a non-participating dentist? How? 
  • Will the amount of the discount that the dentist is required to offer limit the number of treatment options for the plan’s covered individuals? 
  • What are the criteria for selection of providers for the plan? Does it have enough dentists under contract to adequately serve the group? 
  • What is the geographic distribution of patients to dentists? How often is this data updated and how is this communicated? 
  • Does it provide for specialist referrals? 
  • Are dentists limited to referring patients to contracted specialists? 
  • Are there restrictions or limita¬tions on coverage if treatment is provided by specialists? 
  • How does the program provide for emergency treatment? What provisions are in the program for emergency care away from home?

Dental Health Maintenance Organization/Capitation Plan/ Pre-paid Plans
A dental health maintenance organization (DHMO) is a common example of a capitation plan. Under a capitation plan, contracted dentists are “pre-paid” a certain amount each month for each patient that has designated or been assigned to that dentist. Dentists must then provide certain contracted services at no cost or reduced cost to those patients. The plan usually does not reimburse the dentist or patient for individual services and therefore patients must generally receive treatment at a contracted office in order to receive a benefit.

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Other Types of Dental Plans

Discount or Referral Dental Plans
Discount/referral plans are technically not insurance plans. The company selling the plan contracts with a network of dentists. Contracted dentists agree to discount their dental fees. Patients pay all the costs of treatment at the contracted rate determined by the plan.

Point of Service Options
Point of service options are arrangements in which patients with a managed care dental plan have the option of seeking treatment from an “out-of-network” provider. The reimbursement to the patient is usually based on a low table of allowances; with significantly reduced benefits than if the patient had selected an “in-network” provider.

Table or Schedule of Allowances Plans
These types of plans are indemnity plans that pay a set dollar amount for each procedure, irrespective of the actual charges. The patient is responsible for the difference between the carrier’s payment and the charged fee. The plan may also be paired with a PPO that limits contracted dentists to a maximum allowable charge.

If a plan calculates benefits according to a table of allowances, answering the following questions may assist the purchaser in the decision-making process:

  • What is the difference between the fee schedule the payer calculates and a typical dentist’s fee schedule for the listed procedures?
  • What is the level of benefits? 
  • What provisions are in the plan for adjusting the table for inflation and changes in dental procedures? 
  • What provisions are in place for determining coverage for necessary procedures that are not included in the table? 
  • Is the terminology in the table consistent with the ADA’s Current Dental Terminology manual?

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Questions to Ask

If the plan purchaser is reviewing a DHMO or capitation plan, answering the following questions may assist in the decision-making process: 

  • What percentage of the premium is used for administration or non-claim payment costs? 
  • Does the plan allow coverage for necessary treatment as determined by the treating dentist?
  • What is the utilization rate for patients with this type of coverage?
  • What is the average waiting period for an initial appointment?
  • What is the average period between appointments?
  • What is the dentist/patient ratio for the program? How current is this information or how often is this updated?
  • What are the criteria for selecting dentists to participate in the program?
  • What is the geographic distribution of patients to dentists? How often is this data updated? 
  • What is the ratio of dentists accepted to the program to those who applied to participate?
  • What percentages of dentists participating in the program no longer accept new patients enrolled in the plan? 
  • How many dentists voluntarily withdrew from the program over the past two years, and why? 
  • What is the capitated rate of compensation for the dentists? Is it sufficient compensation for the needs of the covered patient population? What provisions are made for dentists with unforeseen utilization or difficult cases?
  • What are the benefits for patients requiring a specialist’s care? How are specialists selected and compensated? Does the plan have adequate specialist participation? 
  • How does the program provide for emergency treatment? What provisions are in the program for emergency care away from home?

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