17 minute read
Commercial Dental Benefit Plans
Charles D. Stewart, DMD
Commercial dental benefit coverage has been identified by many terms, including dental insurance, dental benefits, private dental insurance and dental plans. The model refers to dental benefits offered through an arrangement with an employer or employer group or individually purchased coverage. The plans offered through an employer or employer group are standardized for that employer and may have varied coverages, benefits, exclusions and limitations. Individual plans are more standardized and structured with specific benefit levels and coverages. These individual plans rarely permit any options or changes to the standard offering.
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Dental coverage as we know it today began because of the International Longshoreman’s Union/Pacific Maritime Association’s (ILWU-PMA) desire to add a dental plan as an employee or member benefit. In 1954, these organizations consulted with the California, Oregon and Washington dental associations to work on developing some type of dental coverage. 1 The result of this collaborative effort was the development of a benefit model where certain dental benefits were prepaid in the form of capitation to the dentist and other dental benefits were reimbursed by an established patient copayment that was paid by the patient directly to the dental office. This effort resulted in the formation of a subsidiary of the Washington Dental Association, named Washington Dental Service (WDS), later to become a Delta Dental plan, to administer this new prepaid dental benefit. Though many would suggest the Delta Dental plans are an indemnity plan, they do share many characteristics of that model, differing by their regulatory oversight. This regulatory oversight has associated requirements for benefits, quality and oversight.
In 1959, the Continental Casualty Company (CCC) became the first commercial insurer to offer dental insurance.
The indemnity or private model of commercial dental benefits grew dramatically following the development by the CCC. The early model had rich coverages with specific annual maximums. A common complaint today is that the annual maximum appears seemingly frozen at a level close to what it was at the inception of the benefit model.
The early dental health maintenance organization (DHMO) model worked well and provided valuable experience and learning opportunities for WDS. Today’s DHMO model resulted from evolution of this early WDS model of dental coverage. Some of the experiences learned proved that “dental is different” and that a traditional medical HMO model and operation did not fit or work well in a dental office setting. The dental HMO model grew in acceptance from both providers and patients, and by 1966, 2 million patients were covered by a dental HMO (prepaid dental). The explosive growth of this segment of the dental benefits industry continued, and in 1970, 12 million patients were covered. 1 The Knox-Keene Act was written in 1975 as state legislators in California recognized the growth of this industry and required that regulations be established to set standards that assured compliance and consumer protections. In addition to the regulations, the Knox-Keene Act established governmental oversight for the prepaid medical and dental benefits industry. Initially, the oversight fell to the California Department of Corporations. The current regulator, the California Department of Managed Healthcare (DMHC), was established in 1999. The DMHC has oversight of and regulates all DHMOs in California as well as the products of Delta Dental of California. The dental preferred provider organizations (DPPO) began in the mid-1990s. 1 Most dental PPOs are regulated by the California Department of Insurance. The oversight by the two different regulators in California differ in scope, magnitude and engagement.
In 1981, 82 million patients were covered by a dental HMO 1 and growth seemed to continue unchecked. As the millennium approached, the dental benefits industry continued this growth pattern, and reportedly, over 150 million Americans had some type of dental benefit. 1 By 2015, roughly 64% of the U.S. population had dental benefits. This number, when reviewed, showed about 170 million patients had some form of commercial dental benefit and about 50 million patients had benefits through a governmental program, such as Medicaid, Medicare or the Children’s Health Insurance Program (CHIP).
Today
In 2022, the standard commercial models of benefits described previously continue to exist, though the market share proportion of each of these models differs substantially from the market shares reported previously. Today, the DPPO product accounts for 86% of the dental benefit policies issued, according to the National Association of Dental Plans. The mechanics of the PPO model involve a network of contracted providers for patients to choose from. These network dentists agree to accept a discounted fee schedule in return for the referral of patients covered by the dental benefits plan. Most PPOs offer out-of-network (OON) benefits, with the OON benefit having the patient bear higher out-of-pocket costs. Some benefit plans even have lower annual maximums and higher deductibles than that which would exist by the patient being treated by an in-network dentist. Most PPO plans provide full coverage for diagnostic and preventive procedures, and some plans do not apply a deductible for these categories of procedures. For all the other categories of CDT codes and procedures, most PPOs pay either a percentage of or flat fee for the specific procedure. PPOs use a claim-based model of benefits and reimbursement. Specialists and general dentists are contracted to become participating providers.
The National Association of Dental Plans
The DHMO plans use a closed network of providers, requiring the patient to select a primary care dentist. The primary care dentist is paid a fixed amount per month to provide a prepaid set of procedures to the assigned patient. Other procedures may have assigned copayments if performed. The DHMO model has prepaid benefits, meaning that claims are not required for reimbursement, though most DHMO’s require the submission of encounter claims. The reference to closed network infers that there are not out-of-network benefits available for the patient with the DHMO model. Specialty care and services are available from the panel of contracted specialists.
The dental indemnity model makes up slightly over 5% of 2022 dental benefit policies issued. This claims-based model’s market share has been impacted by the strength and growth of the DPPOs and DHMOs. Dental indemnity plans are similar in structure to a PPO, without the network of providers. The California Department of Insurance provides oversight of and regulates dental indemnity plans. The level of benefits on these plans is highly variable, based on the purchasing employer’s desires. Some additional factors contributing to the decline of the dental indemnity model are premium costs that are associated with no network providers and high utilization with patients desiring to maximize their benefits used.
The other significant model of commercial dental benefits is the discount dental plan. Roughly 6% of the 2020 4 products issued were discount dental plans. Discount dental plans are not insurance but are designed where a dentist agrees to accept a discounted fee for procedures.
The patient pays the dentist directly for all services performed based on the plan. No claims or encounters are required for the discount plan model. Many dentists sell this type of plan directly to their patients. The DMHC regulates discount dental plans in California.
Governmental programs such as Medicaid (Medi-Cal Dental), CHIP and Medicare may follow a PPO or DHMO model. In addition, these government-sponsored programs may use a commercial dental benefit company to administer the program.
Admittedly, not all the described models of dental benefits would be acceptable to all dentists; some dentists may accept some, some may accept all and some might not accept any form of reimbursement, preferring a cash-only dental practice model. Frustrations may exist with any of these models. For DHMOs, the structure of benefits and reimbursements may be simple or complex. Rules of what is or what is not a covered benefit complicate a practice’s ability to understand and communicate dental benefits to their patients. Dental benefit design lends itself to dentists and dental staff negotiating with and educating patients. Many dentists have expressed the concern that the DHMO-covered benefits are “free” when they are prepaid monthly. This structure where negotiation is required could lend itself to the high level of consumer complaints regarding balance billing and covered benefits. Most DHMO plans allow a dentist to provide an alternative or upgraded procedure if the covered benefit has been presented to the patient. When looking deeper at the design of the DHMO plans, the most common financial frustration is with the fixed copayment design of the DHMO plan. This design defines the maximum fee that can be charged for a specific CDT code. These fixed copayments rarely, if ever, are changed, as any change in fixed copayment is embedded in the plan design and requires a filing with the DMHC before being permitted. This difficulty to update the fixed copayment creates a “stale” or outdated fee structure.
The PPO model has similar frustrations regarding the “staleness” of fees expressed about the DHMO model. Some dental benefit plans allow providers of the DPPO model to negotiate fee schedules. Negotiating fees, if permitted, provides some control over the amount of payment received on a per-procedure basis. Some dental benefit companies do not negotiate fees and use standard geographic fee schedules. Dentists need to determine if the benefit of contracting with a DPPO fits within their individual practice model; this selection is key to a mutually beneficial relationship between the dentist and the dental benefit plan.
Another concern is with the annual maximum. Many DPPO plans have the same annual maximum in place as they did in the early 1990s. 5 The National Association of Dental Plans 2021 Dental Benefits Report from October 2021 stated that the percentage of PPO (in-network) patients who reached their annual maximum declined 2.4%. This is best explained as most dental benefit plans will provide a benefit level to an employer or company based on the desire of that employer or company, though only a small percentage of patients ever reach that amount. In 2022, many dental benefit plans offer $2,500 or more as an annual maximum. Some rare plans do not have an annual maximum at all. Some traditional plans still have the $1,000 annual maximum that was common with the inception of the PPO concept. In a nutshell, the annual maximum should not be generalized to a dental benefit plan, as variants can and do exist in every benefit company. Tiered benefit levels based on the participation status of the dentist are another source of confusion for the PPOs. These tiers may provide a higher level of reimbursement, coverage and/or annual maximum when treated by an in-network dentist. Consumer complaints do exist with this product, however, the number of complaints on the PPO plans are much smaller compared to the DHMOs.
There are positive aspects to the different models of dental benefit designs. The DHMO model is viewed as an affordable benefit plan by employers and employer groups. This delivery model does not fit for every dentist or every dental office. There are dentists who prefer the stability of this model, with the predictable monthly capitation payment, viewing this as a guaranteed monthly income. During the 2020 COVID-19 pandemic and shutdown, dental benefit plans continued to pay providers their monthly capitation uninterrupted. This provided income to dental practices when dental care was restricted to emergency appointments only. The future of this benefit model appears uncertain. Enrollment in DHMOs has dropped reflective of the current employment situation in California. Growth and recovery of this market is flat, with pre-pandemic enrollment numbers remaining illusive. The financial stability discussed regarding the DHMO does not apply to the DPPO market. The DPPO is a claims-based, patient-based model. During the COVID-19 pandemic, patient visits were restricted to emergency services only, which allowed no financial stability or guaranteed income for PPO providers. Patients were limited in their ability to see the dentist for dental care other than emergency services. No treatment means no claims, which leads to no income.
The driver or influencer over change in plan design and premium costs is the plan purchaser. As previously noted, employers influenced the early development of dental benefit coverage and have continued to play a significant role in sponsoring dental coverage and driving change in benefit models and coverage levels. However, significant shifts have occurred in the last few decades on the employer’s role in paying for dental coverage by markedly shifting the premium costs to their employees. In the early WDS model discussed previously, all premiums were paid by the ILWU-PMA, likely from dues. Employer-sponsored plans paid the entire premium in these early models. Under today’s dental benefit model, the patient can select different products during their open enrollment, with the employer contributing a specific amount toward the monthly premium. Most dental benefit companies are willing to design a benefit package with different coverage levels, annual maximums and benefits. Some employer groups today want higher annual maximums, coverage for implants and implant prosthetics, coverage for sleep appliances, coverage for TMJ treatments and enhanced benefits for dental/ medical conditions. Providing a more comprehensive and integrated benefit demonstrates some hope for change for the future of the dental benefit industry. The correlation between oral health and overall health has prompted dental benefit plans to offer programs that enhance benefits for those patients with qualifying medical conditions. Cardiovascular disease, cerebrovascular disease, diabetes and pregnancy are the most common medical conditions linked by dental benefit plans to be eligible for enhanced dental benefits. The specific enriched dental benefits vary by plan, but generally are an allowance for an additional prophylaxis or other periodontal procedures. Research has shown true savings in medical costs for those with the medical conditions who access their enhanced dental benefits.
Some full-service benefit plans (medical and dental) can review medical claim data to determine eligibility for the enhanced dental benefits. Standalone dental benefit plans rely on the patient to self-report the medical condition for consideration of any enhanced dental benefits.
Improved access to care is a beneficial aspect of having a dental benefit plan for the patient. 7,8 Plan regulators require that dental benefit plans have filed access standards or requirements that all providers are expected to meet to ensure patient appointment access. These access requirements vary from benefit plan to benefit plan and even product to product. The goal of the access standards is to provide consistent and guaranteed access to care. In 2022, many dental benefit plans are exploring expanding their product scope into the individual marketplace, thus, there is the potential for more insured individuals. More insured individuals means increased demand for dental treatment and access, but also means the potential for increased patient flow. It’s a win-winwin for enrollees, providers and plans.
Looking Ahead
The future looks bright for the dental benefits industry. While more Americans are retaining their natural teeth into their later years, dental caries and other diseases remain a constant threat to good oral health. The foods consumed, the delivery of that food (fast food), sugary snacks and lax home care regimens can assure that the need for dental care will continue into the future. The dental benefits industry serves as a conduit for enrollees to receive needed dental treatment.
Changes to the industry are starting to happen with the use and integration of artificial intelligence (AI). AI is the practice and development of automated systems and processes using computer systems to perform tasks that historically required human intervention or human intelligence. The world is experiencing speech recognition, visual recognition, decision-making and analysis and language capabilities all moving to some form of AI. Dental plans are also implementing some of these capabilities in the customer service departments as well as claims and utilization management processes to improve efficiencies and identify anomalies in claim submission. All dental benefit plans have extensive and comprehensive programs to address fraud, waste and abuse (FWA) in the dental insurance claims process. These programs addressing FWA are required by law. Several private companies offer AI as a tool to assist in the identification of FWA. Using AI, the detection and follow-through on potential FWA have become more sophisticated. Historic FWA programs were generally internal to a dental benefits company and used algorithms to analyze and select claims, claim patterns and develop practice profiles used to identify, curtail and prosecute FWA, but these internal programs were limited to internal claims and claims processes. With AI, analysis of claims does occur, but the analysis can identify additional patterns and concerns, such as the same duplicate radiographic or photographic images used for different patients as well as upcoding of restorative surfaces.
AI is being used to expedite claim review and claim processing, with a higher level of accuracy than with the traditional or historic models of manually handling claims. With AI, all claims are addressed using an automated process that provides a faster, fairer and more consistent outcome for the patient, the provider and the dental benefits plan. Kyle Stanley, DDS, an international lecturer known for his work in the field of dental AI, says “Like it or not, insurance is the dental industry’s financial engine. Anything that makes that engine more efficient is going to benefit dentistry as a whole.” 9
AI shows the potential of streamlining the claims review process. With increased acceptance of AI, the result will be less human intervention, more automation, centralized information resources, standardized professional reviews and elimination of human errors and bias. These changes ultimately benefit the dental providers and dental staff by eliminating the burdens and concerns that exist today regarding the claims review process.
AI implementation is not limited in scope to the dental benefit plans. AI can be used in the dental office as well. In 2022, many dentists use digital imaging systems or CAD/CAM technology for restorations or prosthetics. Newer applications can be used to aid in the detection of soft tissue abnormalities, bone loss, calculus and caries from the various images obtained in the examination process. Other applications could be used to develop a treatment plan. The potential expansion of the capabilities of AI provides a bright future that will enhance the dental experience for patients, providers and plans alike.
Conclusion
In the 70 years since the initial concept of a dental benefit plan was developed, many changes have occurred. Unfortunately, some things such as basic benefit design, annual maximums, exclusions and limitations remain unchanged, much to the dismay of the dental professionals of 2022. As dental benefit plans provide many patients with a financial means and incentive to achieve and maintain dental health, they too cause frustration for dental patients, dental providers and their office staff. Today’s dental benefit plan is much more flexible and willing to offer and design a product based on the request of an employer group than in the earlier years of the industry, but this acceptance is dictated by the willingness of the employer groups that purchase the product to make changes to their employees’ package of dental benefits. Artificial intelligence provides hope for the future to apply the processes necessary to continue easing the frustrations expressed by many users of the dental benefit plans.
REFERENCES
1. National Association of Dental Plans. Dental benefits history.
2. Encyclopedia.com. Dental insurance.
3. American Student Dental Association. Understanding dental insurance.
4. National Association of Dental Plans. 2021 Dental Benefits Report: Enrollment. December 2021.
5. National Association of Dental Plans. 2021 Dental Benefits Report: Enrollment. October 2021.
6. Center for Integration of Primary Care and Oral Health and Harvard School of Dental Medicine Initiative. The Challenge of Medical Dental Integration.
7. American Dental Association. Oral health and well-being in the United States.
8. Manski RJ, Moeller JF, Chen H. Dental Care Coverage and Use: Modeling Limitations and Opportunities. Am J Public Health 2014 February; 104(2): e80–e87. Published online 2014 February. doi: 10.2105/AJPH.2013.301693.
9. Stanley K. AI set to fix dental insurance. Dent Econ Feb. 29, 2020.
THE AUTHOR, Charles D. Stewart, DMD, can be reached at stewartc@cvshealth.com.
