Dental Insurance Plans

Paying The Dentist

The following is taken from the booklet "What Everyone Should Know About Selecting and Using Dental Benefits." A Consumer's Guide to Dental Insurance, published in the public interest by the California Dental Association.

Paying The Dentist
When choosing a benefits plan, it is important to know who pays what to whom. Dental plans can be categorized into three types based on the compensation and treatment provided.

Indemnity Plans. This type of plan pays the dentist on a traditional fee-for-service basis. A monthly premium is paid by the patient and/or the employer to an insurance carrier, which directly reimburses the dentist for the services provided. Insurance companies usually pay between 50 percent and 80 percent of the dentist's fee for covered services; the remaining 20 percent to 50 percent is paid by the patient. These plans often have a pre-determined deductible, a dollar amount which varies from plan to plan, that the patient must pay before the insurance carrier will begin paying for care. Indemnity plans also can limit the amount of services covered within a given year and pay the dentist based on a variety of fee schedules.
Capitation Plans. This type of plan provides comprehensive dental care to enrolled patients through designated provider dentists. A Dental Health Maintenance Organization (DHMO) is a common example of a capitation plan. The dentist is paid on a per capita (per head) basis rather than for actual treatment provided. Participating dentists receive a fixes monthly fee based on the number of patients assigned to the office. In addition to premiums, patient co-payments may be required for each visit.
Direct Reimbursement Plans. Under this self-funded plan, an employer or company sponsor pays for dental care with its own funds, rather than paying premiums to an insurance carrier or third party. The patient pays the dentist directly and, once furnished with a receipt showing payment and services received, the employer reimburses the employee a fixes percentage of the dental care costs. The plan may limit the amount of dollars an employee can spend on dental care within a given year, but often places no limit on services provided. Patients can select a dentist of their choice and, in conjunction with the dentist, can play an active role in planning the treatment most appropriate and affordable to ensure optimum oral health.
4. Calculating Payments
A clear understanding of the methods used to calculate benefits and payments will allow you to compare and evaluate the purchasing power of different plans. The following are four common payment schedules:

Capitation (per capita). This fee schedule is used by plans structured to provide a predefined level of benefits. Because dental care needs vary by individual, it is critical to have a thorough understanding of the level or range of services "defined" or covered by the plan. Under this fee schedule, the patient is responsible to pay for treatment not covered within the scope of the plan. In some cases, the allocated payment a dentist receives from the benefits plan, including patient co-payments, is less than the actual cost of providing care. Patients often settle for less-than-optimal treatment alternatives or postpone necessary services when their co-payments do not cover all possible options.
Table or Schedule of Allowances. Plans using this form of benefits calculation establish a maximum dollar limit for each covered procedure, regardless of the fee charged by the dentist. If you select a plan that uses this type of table or schedule, ask how often the table is adjusted for inflation or for changes in accepted dental procedures. In these plans, the difference between the allowed charge and the dentist's fee is paid directly by the patient.
Patients should understand that contracted fee reductions listed in some plan allowance schedules can significantly diminish the level and quality of care delivered. Contracted rates are based on the size of the patient population and projections of the amount and type of treatment performed within a given time frame. Since cost control drives this payment approach, your ability to choose your dentist or see a specialist may be limited.

Direct Reimbursement. In this self-funded plan, the patient pays the doctor for services. The employer or plan sponsor reimburses the employee for a predetermined percentage of all costs. Under this fee schedule, the employee has an incentive to work with the dentist to plan healthy and economical solutions.
Usual, Customary and Reasonable (UCR). Most indemnity (traditional fee-for-service) plans use this payment schedule. It allows patients to select their own dentist. The UCR schedule pays benefits based on a fixed percentage of the lesser of the dentist's fee or the fee determined by the insurance carrier to be "usual," "customary" or "reasonable" for the service in the community in which the service was delivered. Wide fluctuations in UC fees between communities have made this payment system highly controversial. Because many insurance carriers set the UCR percentage too low in comparison to the area's usual professional fees, patients may wind up paying more out-of-pocket. Most payments are made directly to the dentist, but in some instances they are made to the beneficiary

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