What is a dental insurance plan's UCR fee?

When reading through your dental insurance policy you may very well run into the term "UCR fee." The letters UCR stand for the words "usual, customary and reasonable."

A dental insurance company uses a URC fee as a way of capping their expenses. Most dental insurance plans will read along the line that they will pay a certain percentage (100%, 80%, 50% are common break points, depending on what type of dental service has been performed) of the dentist's actual fee or the dental insurance company's UCR fee, whichever is less.

An insurance company calculates a UCR fee for a certain dental procedure by way of evaluating those fees submitted to them by dentists in a specific geographic area. The procedure's UCR fee is then set at a point where a chosen percentage (often 80 - 90%) of all of the fees that have been submitted are lower.

An example of how UCR dental insurance benefits are calculated.

As an example, let's assume that you have a need for a dental crown and your dental plan states that it will pay 50% of the cost of crowns. Your insurance company will already have fee data from dentists in your area that have placed crowns for other plan members. And from this data, let's say, the insurance company determines that 90% of these dentists charge $1000 or less for placing a dental crown. Based on this information the dental insurance company decides to set its UCR fee for dental crowns at $1000.

» Example #1: Your dentist charges less than the UCR fee.

Now, it maybe that the fee that your dentist charges for dental crowns is comparatively low to that charged by other dentists. Let's say that your dentist's fee is $800. If so, when the insurance company determines your benefits for the placement of your crown, they will pay 50% of $800, which is $400. You would then pay your dentist the outstanding $400 to pay off the balance of your crown.

» Example #2: Your dentist charges more than the UCR fee.

But what if the dental crown fee that your dentist charges is comparatively high, say $1200? In this case the dental insurance company would only pay 50% of their calculated UCR fee for dental crowns, which is $1000. This means that they would only pay $500 of the dentist's fee, you would be responsible for the remaining $800. That's a pretty big difference compared to the first example.

A dentist's fee that is higher than the UCR fee does not mean that they are over charging.

It's important for you to understand that a dentist's fee in excess of a dental insurance company's UCR fee should not necessarily be interpreted as the dentist is overcharging for their services. It simply means that it is above the UCR fee, which you have absolutely no knowledge about how it has been calculated.

For example, at what level of the range of submitted fees has the UCR fee been set (80 - 90%, or less?). What geographic region has been used for the fee calculation? Is it reasonable to think that all of the dentists in the region have the same expenses? How up-to-date are the fees that have been used to calculate the UCR fee? These are just a few of any number of factors that could bias a UCR fee. And clearly a low UCR fee works out to the financial advantage of the dental insurance company.

Your out-of-pocket costs can be significantly affected if your dentist's fee is above the UCR fee.

It is important for you to have a general idea of how your dentist's fees compare to the dental plan's UCR fee schedule (their front office staff or others on the same dental plan will know). As demonstrated above, this relationship can affect your out-of-pocket expenses significantly. If your dentist's fees don't compare well with the plan's UCR fees, you might ask other plan members what their experiences have been with their dentist. It may be a universal problem with the dental insurance policy, or it may be one somewhat isolated to the dentist you have chosen.

If your dentist does seem to have comparatively higher fees across the board, you might ask yourself what is unique about the dentist? Does their training, experience or their expenses associated with providing services justify the higher fees? If so, then the cost is well worth it. If not, then it's time to shop around.