Dental Benefits 101 January 30, 2008 Presenter: Sara Zook
A Brief History
Description of Types of Plans
A Brief History
A Brief History
The dental benefits industry in the U.S. began as a by-product of the health insurance industry.
1954- Nation’s First Dental Plan- Washington State Dental Service Corporation. 1
In 1962, 1 million people (less than 1% of U.S. Population) were covered by dental benefits. 2
By 1999, 153 million individuals (56% of U.S. Population) had some type of dental benefits. 2
Journal of Dental Education, Future Trends in Dental Benefits , 2005 69: 586-594
Mayes, Donald S., Dental Benefits: A Guide to Dental PPOs, HMOs and Other Managed Plans , Revised Edition: 2002.
Dentists Practice Differently
Most Dentists practice individually
MDs- 35% practice individually 1
DDS- 76.6% practice individually 2
Dentists do not require hospital privileges
What does this mean?
(1) Medical Economics, “Do you have the right stuff to go solo?,” Jan. 8, 2001; (2) Journal of Dental Education, Association Report: Trends in Dentistry and Dental Education , June 2001
Dental Cost Pressures Are Increasing
Lost work time
Over 164 million work hours (approximately 20.5 million days) and 51 million school hours (approximately 7.8 million days) are lost each year due to dental problems 1
Production time lost due to off-the-job injuries totaled about 170 million days; 80 million days were lost by workers injured on the job 2
Emergency room costs
People in the 19 – 35 age group have more emergency room visits for dental emergencies than medical emergencies 3
80% of dental-related emergency room discharges receive prescription for at least one medication 3
(1) U.S. Department of Health and Human Services. Oral Health in America: A Report of the Surgeon General. Rockville, MD: U.S. Department of Health and Human Services, National Institute of Dental and Craniofacial Research, National Institutes of Health, 2000; (2) Injury Facts 2003 Edition , National Safety Council; (3) Lewis, Charlotte, MD, MPH, Lynch, Heather MD, and Johnston, Brian, MD, MPH, Dental Complaints in Emergency Departments: A National Perspective, Annals of Emergency Medicine, Volume 42, Number 1, July 2003 Indirect costs of dental problems
Types of Plans
Types of Coverage 1
Capitated Dental Plan
Dentist paid on a per capita basis, fixed rate for each individual or family enrolled.
Participant must see a DHMO dentist for coverage.
Typically smaller networks.
Fee-For-Service Dental Plans
Reimbursement based either on a schedule or UCR.
Network of dentists agreeing to accept a discounted level of payment for covered services.
Out of Network option, plan design/carrier determines reimbursement level.
Typically larger networks.
(1) Mayes, Donald S., Dental Benefits: A Guide to Dental PPOs, HMOs and Other Managed Plans , Revised Edition: 2002.
Dental Plan Trends (1) National Association of Dental Plans. 2005 Joint Dental Benefits Report, Enrollment, July 2005; (2) The significant decline in Access/Discount plans between 2000 and 2002 was impacted by the removal of some health plans previously in this category that included a limited dental benefit. PPOs are the only segment with significant growth over this four-year period 1
Major Restorative (Type C/III): Crowns, Bridges/Dentures
Contractual Limitations and Exclusions
HMO- A Sample Plan Design None Annual Maximum $2,500-$3,900 Orthodontia Copay Schedule, ranges from $350-$475 Major Restorative (i.e. crowns) Copay Schedule, ranges from $20-$90 Basic Restorative (i.e. fillings) $0 Preventive $0 Deductible
Indemnity Plan Design 50% D (Orthodontics) 50% C (Major Restorative) 80% B (Basic Restorative) 100% A (Preventive) (% R&C) TYPE OF SERVICE
PPO Plan Designs – “Classic” Plan 50% 50% D (Orthodontics) 50% 50% C (Major Restorative) 80% 80% B (Basic Restorative) 100% 100% A (Preventive) OUT-OF-NETWORK (% R&C) IN-NETWORK (% PDP fee) TYPE OF SERVICE
PPO Plan Designs – “Maximum Allowable Charge (MAC)” Plan This plan is not available in every state on a fully insured basis. Please check with an advisor prior to offering. 50% 50% D (Orthodontics) 50% 50% C (Major Restorative) 80% 80% B (Basic Restorative) 100% 100% A (Preventive) OUT-OF-NETWORK (% PPO fee) IN-NETWORK (% PPO fee) TYPE OF SERVICE
PPO Plan Designs – “Incentive Plan” This plan is not available in every state on a fully insured basis. Please check with an advisor prior to offering. 50% 50% D (Orthodontics) 30% 50% C (Major Restorative) 60% 80% B (Basic Restorative) 80% 100% A (Preventive) OUT-OF-NETWORK (% R&C) IN-NETWORK (% PPO fee) TYPE OF SERVICE
PPO Plan Designs – “Incentive MAC Plan” This plan is not available in every state on a fully insured basis. Please check with an advisor prior to offering. 50% 50% D (Orthodontics) 30% 50% C (Major Restorative) 60% 80% B (Basic Restorative) 80% 100% A (Preventive) OUT-OF-NETWORK (% PPO fee) IN-NETWORK (% PPO fee) TYPE OF SERVICE
No coinsurance differentials are permitted: No distinction can be made in- and out-of-network coinsurance / benefit
Size of differential is restricted: Size of coinsurance / benefit differential in- and out-of-network is limited
Coinsurance / benefit differentials are permitted: These states are silent on the subject of coinsurance / benefit differentials
Oregon Montana Idaho Wyoming North Dakota South Dakota Minnesota Nebraska Kansas Oklahoma Texas New Mexico Arizona Utah Nevada California Colorado Iowa Missouri Arkansas Louisiana Mississippi Alabama Tennessee Georgia Florida South Carolina North Carolina Kentucky Ohio Indiana Illinois Michigan Wisconsin West Virginia Virginia Pennsylvania New York New Jersey Maine VT NH MA CT Rhode Island Delaware Maryland Washington DC Extraterritorial states include: MA, MS, MT and TX. Washington STATE LIMITATIONS ON INSURED PLANS COINSURANCE DIFFERENTIALS
Allocation of Services
By reallocating these services, you could save 11% * *Percentage indicates plan savings off of MetLife’s full block of self-funded/insured PPO plans based upon analysis of MetLife’s 2004 book of business. Type C Prosthodontics
Endodontics/ root canal
Type D Orthodontics Type B Restorative
Pulp capping/ pulpal therapy
Type A Preventive & Diagnostic
Full mouth X-rays
Bitewing X-rays, periapicals & other X-rays
Lab and other tests
Note: Options may be subject to state regulations. Type A, B, C & D covered services
Limitations and Exclusions Potential savings of 3.5 – 5% * *Range indicates plan savings off of MetLife’s full block of self-funded/insured PPO plans based upon analysis of MetLife’s 2004 book of business. Fluoride age Once per 12 months Space maintainer age Once per lifetime Periodontal maintenance Combined with cleaning Prosthodontic services Sealant age One per 60 months Fillings R&C Percentile Implants One per 60 months Up to age 14 Up to age 14 2 per year 1 in 10 years Up to age 14 1 per 24 months 80th Not covered More Robust Lower Cost Alternatives Up to age 19 Up to age 19 4 per year 1 in 5 years Up to age 19 No limit 90th Covered Note: Options may be subject to state regulations.
Other things to look for
If the Current Contract Is “Open,” Is the Quote “Closed”? Estimated Price Impact = 1% to 3%
Does the Quote Include Asymptomatic or Naturally Functioning Tooth Limitations? If So, How Are They Applied? Estimated Price Impact = 2% to 3%
Are All Endo., Perio. and Oral Surgery Services in One Category (e.g., Type B) or Are They Split Among Categories (e.g., Type B & C)? Estimated Price Impact = 5% to 25% (8% if 100/80/50)
If the Current Plan Is R&C Based (out-of-network), Is the Quote R&C Based? Is R&C Calculated the Same Way? Estimated Price Impact = 0% to 20%
SOURCE: Estimates are based on MetLife data.
Adding it all together… – Oral Examination – Oral Examination (hard/soft 6 months?) – Fluoride Treatment – Fluoride Treatment (consecutive months?) – Prophylaxis (cleaning) – Prophylaxis (cleaning) (combined w/ Perio.?) – Sealants – Sealants (per tooth; per lifetime?) – X-Rays – X-Rays (bitewings only / consec. months?) – Oral Surgery – Minor Oral Surgery – Fillings – Fillings (replacement limits?) – Endodontics – X-Rays (all other / limits?) – Periodontics – Endodontics (pulp caps) – Periodontics (non-surgical / limits?) – Prosthetics – Endodontics (root canal therapy) (bridges, dentures) – Periodontics (combined surgical limits?) – Crowns, Inlays, Onlays – Complex Oral Surgery ( asymptomatic tooth exc.?) – Prosthetics (bridges, dentures) (naturally functioning tooth exclusion?) – Crowns, Inlays, Onlays (Implants / Alt. Benefit?) Type I – Preventive Type II – Basic Type III – Major What You See What You May Get Closed or Open List?
A recommended dual-option approach:
Cover the same services in both plans
Design differences including:
Both plans should be attractive to the entire population to help avoid adverse selection
Low plan should include greater cost sharing features
Lower plan must deliver significant value at an attractive price
Promote high participation and maximize participation in each plan to avoid adverse selection
A recommended approach:
Focus on preventive and diagnostic services
Primary allocation of services
Greater degree of cost sharing for major services
Two-year participant plan selection lock in/lock out
Promote high overall participation by keeping rates attractive to most employees (high and lower utilizers)
A recommended approach:
Offer coverage to individuals who have had coverage as an active employee
Pension deducted payments
Focus on coverage designed to maintain oral health
Promote participation through one open enrollment opportunity, no late entrants
Types of Reimbursement
Discounts can vary widely, especially when multiple networks involved
Can be used as reimbursement both in and out of network
Discounts are sometimes applied to non-covered services, amounts above the maximum, etc.
The administrator’s determination of an out of network average/reimbursement.
Separate fee schedules for General Dentists and Specialists
Services performed by a specialist (i.e. Perio, Endo, Oral Surgery) at a rate of 70%