When researching dental plans you will probably find that each of the various products that you find available fall into one of the following broad categories.
Actually, this type of dental benefits program technically isn't dental insurance at all. When you see these types of products marketed, their advertising will specifically make the point that the program is a "dental plan" as opposed to "dental insurance."
The basis of these dental plans is that a third party (the company who sells the plan) has contracted with dentists (a "closed panel" network of participating dentists) who have agreed to discount their dental fees in exchange for patient referrals from the dental plan company. The company administering the dental plan in essence acts as an intermediary, matching dentists with patients.
While the patient does pay a fee to be a member of the dental plan (so the company administering the plan can cover its expenses and earn a profit) payment for dental treatment is directly from the patient to the dentist, as outlined by the plan's predetermined (discounted) fee list.
This type of dental insurance plan provides payment for dental treatment received by the covered individual on a traditional fee-for-service basis. For some dental procedures (such as preventive dental care) the payment made by the insurance company might be in full. For other types of dental services, it is commonplace that these types of plans will cover between 50 and 80 percent of the cost of treatment.
In those cases where the cost of the dental treatment for the individual has not been fully covered by the insurance company's payment the patient makes up the difference. The dollar amount of coverage provided by the insurance company can be reduced or limited by the dental plan's deductible or maximum dollar benefit. Indemnity dental insurance plans usually employ an "open panel" of dentists. This format allows you to seek services from the dentist of your choice.
The precise methodology by which the dental insurance company determines the amount of payment they will make will vary from plan to plan, but it is usually based on one of the following two schemes:
These dental plans base their payment calculation on either the insurance company's proprietary "usual, reasonable, customary" fee (a "UCR" fee) or else the dentist's fee, whichever is less. As an example:
Let's say that your dental policy states that the insurance company will pay for 80% of the cost of your dental fillings. Now imagine that Dr. Example has determined that you need a dental filling placed and then performs the treatment. The bill comes to $100.
When the dental claim is submitted to the insurance company they will compare Dr. Example's fee to their "UCR" fee for that same type of filling. If their UCR data associates a fee of $120 for the type of filling you have received then the insurance company will (quite happily) pay 80% of the cost of your $100 filling which comes out to $80. You would then need to pay Dr. Example $20 so to settle the remainder of your bill.
If, as an example of the converse, the dental insurance company evaluates their UCR data and finds that it associates a fee of just $90 for the type of filling Dr. Example has placed, then the insurance company will (to your disappointment) make a payment of only 80% of $90. This comes out to $72. You would then need to pay Dr. Example $28 to settle your bill.
It seems like a rigged win-win situation for the dental insurance company. Maybe it is. Maybe it isn't. Insurance companies would like you to believe that the UCR fee they associate with each dental procedure accurately encompasses the fees charged by the majority of dentists in a given area. The unspoken implication here being that if your dentist charges more than the dental insurance company's UCR fee then the dentist is charging too much, or at least more than most dentists.
The reality of the matter is that there is wide fluctuation and no regulation in how a dental insurance company calculates their UCR fees. It would be hard to know if an insurance company's calculations did or did not accurately reflect those fees charged by dentists in a specific area. To the defense of insurance companies, it is obvious why they would need to incorporate some method (such as a UCR fee schedule) by which they could anticipate and contain their expenses. It is also obvious how an unrealistically low UCR fee schedule would favorably affect an insurance company's profits.
These dental insurance policies utilize a list that outlines the dental procedures covered by the plan. Each procedure on the list has associated with it a set dollar amount that the plan will pay when that particular service is required.
Usually the fee found on the insurance company's table is less than what the dentist has charged. In these cases the patient pays the dentist the balance.
A capitation dental insurance plan (such as a dental HMO) is an arrangement where a dentist (or dentists, or a dental office or even many dental offices, etc...) has contracted to provide dental treatment for the dental plan's enrolled members. The provider dentist is paid, usually monthly, a fixed amount per dental plan participant who has selected them to provide their dental treatment. In return it is the dentist's obligation to provide any and all needed dental treatment for these individuals (as specified by the conditions of the dental plan) during the negotiated time frame.
The conditions of each capitation insurance plan will vary, but typically some types of dental treatment (exams, cleanings, x-rays) are provided at no charge to the covered individual, while other dental procedures (dental crowns, bridgework, dentures) require a co-payment. Because a negotiated arrangement exists between the dentist and the dental insurance company, dental capitation plans (dental HMO's) are categorized as "closed panel" dental plans. At the extreme, you may only have a single dental office or clinic to choose from when seeking dental treatment.
Unlike a fee-for-service (indemnity) type of dental insurance plan where the providing dentist is paid for each and every dental procedure they perform, with a capitation plan the providing dentist is paid a set amount regardless of how much or how little dental treatment they provide. This implies that it is in the dentist's best financial interest to help their patients achieve and remain in good dental health. This way the dentist will only need to provide a minimal amount of dental treatment. And as a result their financial bottom line will be enhanced.
Of course knowing that the dentist is paid a set amount per plan member, regardless of how much dental treatment is provided, should bring some questions to your mind. One of them is, will the dentist provide the treatment that is in your best interest. It is certainly possible that the amount of dental treatment that an enrolled individual requires will exceed the amount the dental insurance company will ever pay the dentist to provide this treatment. In this instance the more dental treatment the dentist performs the more money they will lose.
If possible, find people who can tell you what their experiences with the plan have been. When they needed work, did it seem that a full range of treatment options were offered, or was just the quickest and cheapest fix provided?
Since the dentist is paid the same amount no matter how much treatment they provide for plan members (although obviously they must provide enough treatment to keep the dental insurance company happy) the dentist may make access to dental treatment difficult. Try to find out what other people's experiences with the dental plan have been? Are dental appointments readily available, or are they backlogged and hard to get?
And finally, since capitation dental plans utilize a "closed panel" of dentists, you must evaluate what remedies are available to you for those times when you require dental treatment when you are way from home and out of the area serviced by your dental plan.
Dental Preferred Provider Organizations (dental "PPO"'s) are a "closed panel" type of dental insurance plan. The insurance company contracts with dentists so to form a network of treatment providers. As a part of the negotiation with the dental insurance company, the dentist, in return for being included in the network and hopefully receiving an increased patient load, has agreed to discount their fees. The covered members of the dental plan must select from this list of network providers when choosing a dentist.
Of course the terms and conditions of each PPO dental insurance plan will vary, but in general you might consider a PPO plan to be a hybrid of a capitation plan (a dental HMO) and a traditional indemnity dental insurance plan. Similar in nature to a dental HMO, a dental PPO will encourage you to select your treatment provider from a network of participating dentists. If you do so the dental plan will probably provide its maximum benefits.
As an alternative, and somewhat similar in nature to the traditional indemnity dental insurance plan, some PPO's will allow you to receive dental treatment from a dentist who is not a member of their network (a "non-participating" dentist). The trade off is that if you do so you will be penalized with a lower level of plan benefits (higher deductibles and co-payments).
Exclusive Provider Organizations (dental "EPO"'s) are another form of "closed panel" dental insurance plan. They are similar in nature to dental PPO's with the exception that you are offered no option other than receiving your dental treatment from a dentist who is a member of the dental insurance company's network of providers.
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