Dental Plans, Dental Insurance, Dental PPO's
Unraveling the Mystery of the Plans
The object of this page is to help inform you of the difference between dental insurance and the different types of dental plans. Even if you decide to go with another plan or insurance, PLEASE, take a few minutes and read this. It could save you a lot of time, aggravation and money.
• Dental Indemnity Insurance
This is the oldest form of traditional dental insurance. This type of insurance is also the most expensive. The Insurer gambles that they will collect more in premiums than they will pay in claims. The odds are in the insurer's favor because they have control of what, how much, if and when a claim gets paid. Until recently indemnity insurance was available only for groups. Due to the large number of enrollees in the groups, the income to claim ratios is easily kept in the favor of the insurance company.
Indemnity dental insurance is now available to individuals. It is also the most expensive type of dental coverage. You can choose any dentist and the dentist submits their usual and customary fees to the insurance company for payment. Most all dentists will accept indemnity insurance plans because they are able to charge full price!
Keep in mind there are waiting periods (sometimes very long), deductibles, exclusions (procedures that are not covered at all) and yearly limits on benefits. Most insurance plans have a deductible of $50 to $100, pay only a specified percentage for each type of treatment, and have a yearly maximum amount of funds available for dental care.
An example of the typical insurance coverage is: preventive care, cleanings, check-ups, protective dental sealants, x-rays, and fluoride treatment at 80-100%. Basic care, including root canal therapy, extractions, and fillings are usually covered at 60-80%. Major care such as crowns (caps), permanent bridgework, and full and partial dentures as well as periodontal (gum) care are often covered at 50%.
If you get nothing more out of this page, PLEASE UNDERSTAND THIS: Insurance companies are in the business of collecting premiums NOT paying claims. Insurance companies ALWAYS look to make a profit. They will always collect more money in premiums then they will pay in claims. If too many claims are submitted, their profits will decrease, to offset the decreases in profits premiums are increased and/or benefits reduced.
An article by Dr. Jerry Gordon on howstuffworks.com, titled "Digesting the alphabet soup of dental insurance," notes:
Many insurance companies have a yearly maximum between $750. and $1500. Dental insurance is not cumulative, so if you don't use it, you lose it. It is interesting to note that when dental insurance companies became common in the early 1970's, the yearly maximum was the same ($750. to $1500.) as it is today, even though the cost of delivering dental care has nearly tripled since then.
For a more indepth look at Dental Insurance, please see Why Insurance is a Waste of Money
With PPO insurance plans, the insurance companies negotiate fee schedules with dentists in exchange for the dentist being put on a list of "preferred" providers. Employers give the list to their employees to match them up with dentists who participate with the dental plan.
Most PPO plans cover preventive care, cleanings, check-ups, protective dental sealants, x-rays, and fluoride treatment at 80-100%. Basic care, including root canal therapy, extractions, and fillings are usually covered at 80%. Major care such as crowns (caps), permanent bridgework, and full and partial dentures as well as periodontal (gum) care are often covered at 50%. Although is not considered indemnity insurance, you still may encounter waiting periods and the premiums are only slightly lower.
•Prepaid or HMO Dental Plans
Prepaid dental plans have been around since the mid 1970's. These plans were designed for group coverage. With this type of dental plan the dentist receives a portion of your monthly premium. This is called capitation. It is intended to pre-pay a large portion of the cost various services such as routine cleanings, examinations, x-rays, fillings, fluoride and extractions. Fees for other dental services are greatly reduced and paid by the patient at time of service. When a dentist decides to participate in these plans, he/she agrees to accept the capitation as payment for the free services and the reduced fees for other dental services. Because there is a capitation paid for each member the monthly cost of these types of plans are about the same as a PPO. Since the dentist gets paid for you being on their roster, changing dentists can sometimes take awhile.
Past experience has shown that the dentists are not able to cover overhead, let alone make a profit, when providing the free services. Many dentist make appointments available in direct proportion to the amount of capitation they receive, i.e. (1 patient is seen for each $100. of capitation received per month). In many cases the fees that these plans allow for some procedures are so low that is not financially feasible for the dentist to render the service. When this happens the primary dentists may refer the patient to a specialist, (this is known as "Patient Passing"). By passing the patient off, the primary dentist does not have to provide the service (but still gets the capitation), and since the specialist does not receive a capitation, the patient only receives a 15% to 25% discount.
The reduced fees allowed by dental HMO's have participating dentists doing many dental treatments at a financial loss. Consequently, a dental practice with a majority of patients having HMO insurance is often forced to see patients quickly- too quickly in my opinion, to develop the necessary rapport essential to the dentist- patient relationship. For these reasons many dentists are limiting appointments in proportion to the amount of monthly capitation, (i.e. 1 patient per month for each $100.00 of capitation). Still a greater number of dentists eliminating these plans from their practices altogether.
•Reduced Fee ("Discount") Dental Plans
A spin off from prepaid plans, discount dental plans started appearing in the late 1970's. Because there is no reimbursement to the dentist or member and no is capitation paid to the dentist, the cost of administration is greatly reduced. In essence, reduced fee dental plans do the advertising for participating dentists. The dentist agrees to reduce their fee for certain dental services in exchange for new patients. In most cases the plan has a set fee schedule that the dentist follows. Some of these fee schedules are very limited and with most plans, if it is not on the fee schedule, you will be expected to pay the dentist's usual fee.
One of the biggest problems that the dentists quickly discover is that many of the fees are set so low that it is very difficult to cover expenses. In an effort to offset the low fees, the appointment managers may only book "Discount Plan Patients" during the "undesirable or non-production" times. These times tend to be mid-morning and early afternoon, leaving the "desirable" times for the "Fee for Service" patient. Many dentists that are just starting up their practices join these plans and then wind up dropping them. When considering these plans, contact the provider first to find out if they still accept the plan and appointment availability.
•Dental C.M.O. (Cost Maintained Organization)
This is a new concept in the area of managed dental care. A dental CMO is similar in structure to a Reduced Fee Dental Plan. The major difference is that the CMO works for the member and the dental facility. When a dentist joins the CMO the dentist is agreeing to abide by a very detailed fee schedule which covers almost all procedures. The fees that appear on the fee schedule tend to be a little higher than the HMO's, PPO's and Discount Dental Plans.
Although it is harder to market the plan to the public with these higher fees, the members that do join the CMO tend to be a lot happier with the appointment availability, unhurried appointments, provider longevity and overall savings that they realize.
The C.M.O. not only sends the dentist new patients, because of the number of providers, the CMO is able to bulk buy certain materials that are used on a daily basis and are common to all dental facilities. As a provider for the CMO the dentists are able to purchase these materials at a fraction of what they were paying. This unique concept benefits everyone. The members realize a savings at the dentist. The dentists realize practice growth and a savings on their purchases. This type of plan tends to form a solid partnership between the plan, the members and the providers.
PLEASE READ THE FOLLOWING PARAGRAPH CAREFULLY!
Unlike the Indemnity, PPO and Prepaid Plans (HMO), at this time Reduced Fee Dental Plans and Dental CMO's are not regulated by the Department of Insurance in most States. They usually fall under the jurisdiction of the Attorney General's Consumer Affairs Division. Any person wishing to purchase a Reduced Fee Plan or CMO should be careful and understand exactly what they are buying. Recently, multi-level marketing organizations and credit card companies have flooded the reduced fee dental plan marketplace. Many persons representing these newly formed plans have no dental or healthcare experiences. They have no knowledge of dentistry and therefore could make claims that maybe untrue in order to sell their newly formed dental plans and many of them wind up going out of business, leaving their members with no coverage at all.
In essence, USE CAUTION, DO YOUR HOMEWORK, KNOW WHAT YOU ARE BUYING!