Capitation/Dental Health Maintenance Organization (DHMO) Plans

Guidelines for Practice Success | Managing Finances | Revenue

Dental health maintenance organizations require patients to select primary care dentists from within a particular network. These plans are sometimes referred to as “closed panel plans,” meaning the patient must receive treatment from a contracted dentist in order to receive any benefit at all from the plan.

The dentist selected by the patient serves as a gatekeeper and has responsibility for determining whether and when patients should be referred to specialists for treatment. Dentists who are contracted in these plans are “pre-paid” a certain amount each month for each patient assigned to the practice and are required to provide certain contracted services to those patients either at no cost or at reduced rates. This is referred to as a capitation plan.

The ability to profit from participating in a capitation plan depends on how the practice operates. It can also be impacted by the procedures performed; if a dentist performs elective procedures, such as bleaching, that are not covered by the plan, the dentist can typically charge the patient the full fee for that service.

Since the dentist receives payment regardless of whether services are rendered, the practice may benefit by having a predictable cash flow and income source. However, the dentist assumes financial risk, especially if the costs of patient care exceed the amount paid per patient.

Profitability under this system can vary and may depend on the oral health of the population covered by the plan.

More information on Dental Health Maintenance Organizations (DHMO)/Capitation Plans can be found at  An Introduction to Dental Benefits