Group Chap 6: Dental Benefits in the United States Flashcards
Introduction
- One of the most popular employee benefits in the US (80% of the population is covered, up from 60% in 2012)
- Majority are insured in the private commercial market, balance. Covered by Medicaid, individual policies or social insurance
- ACA instituted important changes (2010)
- Included pediatric oral care as Essential Health Benefit
- Expanded income guidelines for Medicaid eligibility
- These changes enhance nmber of people with access to dental insurance - Group dental is the largest component of dental commercial market
Overview of the Dental Insurance Industry
- 61-76% of employers offer dental to their employee (only 37% of small employers do)
- Originally offered as part of health plans, but now almost all are standalone plans
- Group dental similar to other group benefits
- Master policy issued to policyholder
- Employees receive certificate of coverage - Marketed by
- Insurance companies
- Dental service corporations (e.g. Delta Dental)
- BCBS plans
- Dental HMOs
- TPAs - Distribution Primarily independent brokers
- Also internet - Important benefit to attract and retain talent
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Benefits of Employer Sponsored Dental Plans (aka Why Group Dental is purchased)
(1) Employee contributions are often purchased with pre-tax dollars
(2) Helps employees have stable budget for dental costs (i.e. no fluctuation for actual costs of procedures)
(3) Dental HMOs and PPOs give access to network and services at discounted cost and offer credentialing programs to ensure quality of care
(4) Better oral health may be a good indication of better overall health
Components of Dental Plan Design
1. Emphasis on preventive care
- Cheaper in the long run to treat problems in the early years
2. Dental claims typically smaller than medical, so claims costs are more predictable
3. Dental services are more elective than medical
- Include plan design provisions and underwriting requirements to guard against elective nature of dental
- Out-of-pocket cost sharing ensure participants use care appropriately
- Benefit classes
- Class I (Preventive and Diagnostic)
Diagnostic services:
(1) Oral exams
(2) Diagnostic images (X-ray)
(3) Diagnostic tests
(4) Laboratory esxams
Preventive services:
(1) Cleanings
(2) Fluoride
(3) Sealants
(4) Space maintainers
- Class II (Basic)
(1) Restorative services (filings)
(2) Root canal
(3) Gum treatments
(4) Repairs to prosthodontics
(5) Oral surgery
(6) Anesthesia - Class III (Major)
(1) Inlays, onlays and crowns
(2) Bridges and Dentures - Class IV - Orthodontics
(1) Given its own deductible and maximum
- Coinsurance and Deductibles
- Typical plan - 100% for Class I, 80% for Class II, 50% for Class III
- Calendar year deductible waived for Class I
- Typical deductible of $50-$100 per year
- Annual maximum - As costs increase, some services have shifted from Class I to Class II
- Annual out-of-pocker maximums typically don’t exist in dental plans
- Orthodontics usually have their own lifetime maximum (but ACA plans may not impose a dollar maximum on orthodontia benefits)
- Coordination-of-benefit provisions avoid duplication with medical plans
- Provision aimed at limiting cost and anti-selection
- Frequency limitations (e.g. two cleanings per year or 1 set of x-rays per year)
- Pre-existing conditions limitations
- Least expensive alternative treatment (LEAT) - reimbursement based on least expensive clinically acceptable treatment, regardles of actual service chosen/performed
- Waiting Periods - usually from 3-12months; designed to help reduce antiselection
- Exclusions
(1) Cosmetic
(2) Experimental
(3) Items covered under medical plans (ambulance or hospital services) - Benefits after insurance ends - Pay for work started before termination date and finished within 31 days of termination
Underwriting and Rating Parameters
- Group Size
- Eligibile Individuals and Groups
- Participation
- Demographics
- Waiting Periods and Deferral Periods
- Geographic Area
- New Business
- Transferred Business
- Other Coverages
1. Group Size
- Minimum typically five
- Larger the group, lower the prices
2. Eligible Individuals and Groups
- Employees, spouses, dependent children
- Employees are covered until earlier of termination of employment or the group’s cancellation date
- Loads applied by occupation - High utilization include actors, teachers, insurance agents and health professionals
- Income level also tends to correlate with utilization rates
3. Participation
- Minimum participation requirements (some may be as low as 25% participation)
- Pricing may be adjusted to account for participation percentage
- May also include a minimum employer contribution amount for non-voluntary plans (usually 50%)
4. Other Coverages
- Packaging coverages is favorable from underwriting perspective
5. New Business
- Utilization in first few years is usally much higher than later years, so prices are loaded for first few years
6. Geographical Location
- Area rating factors exist and may vary by state, service area, zip code
7. Demographics
- Groups with higher female content receive rate loads (higher costs)
- Age slope for dental is flatter than medical, but costs increase by age (females higher claim costs, but males have higher utilization in extraction and periodontal services)
- Utilization by service class can vary by age and gender groups
- Premium structure
(1) Two tier (employee and dependent)
(2) Three tier (employee, employee plus one dependent, EE plus two or more dependents)
(3) Four tier (employee, employee plus spouse, employee plus child, employee plus spouse and child)
8. Waiting and Deferral Periods
- Waiting period before a new employee is eligible to join the plan
9. Incentive Coinsurance
- Benefits initially at a lower coinsurance for Class II and III services, and increase each year
10. Transferred Business
- Pay for certain charges incurred before the effective data, as longas no break in coverage
- Reduce 1st year deductible by charges applied against the old plan’s deductible
Reimbursement Models and Delivery Systems
- Indemnity Plans
- Dental PPO
- Dental HMO
- Discount Dental Plans
1. Major Types of Provider Reimbursements for Dental
- 1. Dental Indemnity Plans
- 2. Dental PPO Plans
- 3. Dental HMO Plans
2. Indemnity Plans
- FFS reimbursement - members can see any dental provider they choose
- UCR (Usual, Customary, Reasonable) plans are the most common today
- “Scheduled Indemnity Plans”
(1) Covers services up to a maximum per procedure
(2) Dentists that charge above maximum will bill patient for balance
(3) Have generally been replaced by UCR plans
3. Dental PPO
- Contracted network of providers who agree to discount FFS reimbursement with the insurer
- “Managed indemnity plans” or “Passive PPOs”
(1) Contracted fees with participating dentists
(2) Participants encouraged by reduced out-of-pocket to use network dentists
- “Exclusive provider organization plans (EPOs)”
(1) In-network only PPO plans
4. Dental HMO
- Reimburse dentists via prepaid or capitation arrangemets
- Usually overseen by a primary care dentist
(1) Independent Provider Association (IPA) DHMO plans - Independent dentists agree to capitation payments and HMO structure
(2) “Staff Model DHMO plans” - Employ their own dentists
- POS plans - HMO style plans that also offer out-of-network coverage (at reduced level)
- “Hybrid Plans” or “Dual Choice Plans”
(1) Hybrid of indemnity, PPO, and DHMO concepts
(2) Patient can pick between HMO provider, PPO provider, or other provider, at different levels of benefits - Choice commonly made once a year, but could also be once a month or even at point of service
5. Discount Dental Plans
- Give patient access to contracted provider discounts, but patient must pay full cost of services
- Patient saves money by accessing network at reduced rats
Comparing the Major Plan Types
- Premium
- Patient Access
- Benefit Richness
- Cost Management
- Utilization
- Quality Assurance
- Fraud Potential
- Provider Contracting
1. Premium
- DHMO premiums typically the lowest due to capitation mechanism and utilization management
2. Patient Access
- Indemnity plans allow access to any doctor; PPOs restrict access based on cost sharing, and DHMOs only allow out-of-network coverage for siuations such as emergencies
3. Benefit Richness
- PPOs offer much richer benefits within the network
- DHMOs usually offer a lower out-of-pocket expense for the insured
4. Cost Management
- Indemnity programs use UCR limit, LEAT (Least expensive alternative treatment), clinical logic and predetermination of dental necessity to manage costs
- PPOs use same techniques and also manage costs through contracting with cost-effective, quality providers
- HMOs use same techniques and also control utilization and costs via the primary care dentist gatekeeper
5. Utilization
- Fee-for-service reimbursement may encourage overutilization (indemnity and PPO plans) - Dentists motivated to perform extra services
- Frequency limitations (e.g. for dentures) can help reduce unnecessary services
- Capitation in DHMO encourages dentists to only perform minimum level of care
6. Quality Assurance
- PPOs and DHMOs - credentialing helps ensure quality
7. Fraud Potential
- Capitation approach of DHMOs helps minimize many incentives to commit fraud
8. Provider Contracting
- PPOs and DHMOs contract with providers, usually on a one-year term that is automatically renewable
- Network leasing is quite common because plans must contract with many small entities to build a network
Funding Mechanisms
- Most are fully insured plans
- As group size increases, self-insurance becomes realistic
- Direct reimbursement concept encouraages employers to administer their own dental programs
Claim Practices
- Predetermination of Benefits
- LEAT
- COB
- Claims Payment Speed and Accuracy
- Dental Review
- MAC / UCR
1. Predetermination of Benefits
- Pre-treatment review to verify coverage under the plan
- A deterrrent against over-utilization
2. Least Expensive Alternate Treatment (LEAT)
- Dental problems can be treateed with procedures varying widely in cost
- Plan cover the cost of the least expensive treatment
3. Coordination of Benefits
- Plans won’t pay for charges that are also paid by another plan
- Patient will not receive benefits that exceed the charges incurred
4. Claims Payment Speed and Accuracy
- Speedy and accurate claim administration is vital for good customer service
- Typically processed mich quickier than medical claims (95% within 10 business days)
5. Dental Review
- Plans employ dental professionals to review difficult claims, ensure necessity
6. Maximum Allowable Charge
- MAC or UCR covered expenses to the lesser of
(1) Dentist’s usual fee for the procedure
(2) Fee level set by the plan administrator
(3) Reasonable fee for a service, even when unusual circumstances exist
- Most payers use a percentile approach
Future of Dental Benefits
- Employee’s contribution percentage will continue to grow
- Dental plans try to differentiate themselves with unique added benefits
- Consumer-driven healthcare - patients assess their costs and compare fees in advance of treatment
- Some use cell phone apps or smart toothbrushes to track habit in exchange for insurance discounts - Dentist supply increasing but still shortages in the market
- Teledentistry increasing in popularity
- Clinical studies link oral health to overall health (especially chronic diseases like diabetes, heart disease, COPD)
Affordable Care Act
- ACA introduced major changes to dental insurance industry in 2010 (especially in individual and small group)
- Essential Health Benefits required under ACA - included Pediatric oral care
- Child only policies were developed, since adult care was not required
- Dental insurers now have to compete with medical insurers that packaged the pediatric dental as part of their essential benefit package
- Pediatric policies quite different from standard policies (due to ACA rules)
(1) No annual or lifetime limits on benefits - Insurer can’t rely on these limits to control utilization and costs
(2) Annual out of pocket max of $350 per child/ $700 per family
(3) Most states require this coverage to also include orthodontia - Expansion of Medicaid Eligibility
- Era of change in dental industry in coming years - due to healthcare reform, economic uncertainty and changing employer and employee needs
