Do You really Understand Your Dental Insurance?

Moon-Valley-Dental-Care-Understanding-Your-InsuranceIssue I – Insurance Defined

–What kind of Dental insurance do I have? HMO?  PPO? 

For many people the thought of figuring out how their dental insurance works (or medical insurance for that matter) gives them chills, cold sweats, and a pit in the stomach.  Basically, the same feelings that come from a visit to the dentist!

At Moon Valley Dental Care we want to help you understand how your dental insurance works in the most simplified and easy to use way.  If you are able to understand your dental insurance and the basics of how it works, and how it affects your treatment, you will be able to make more informed decisions on how to proceed with dental treatment.  There are a few key points, that if you understand, will help you get maximum benefit from your dental insurance.

First, we have to look at how dental plans fit into one of two general categories. The first category is known as “fee for service” and the other is referred to as “managed care.”

Fee for Service

Fee for service dental insurance can be summed up in three words: Freedom of Choice.

It can be further broken down into 2 different groups:

I.  Direct Reimbursement

The American Dental Association explains direct reimbursement like this:

Direct Reimbursement (DR) is a self-funded dental benefits plan that reimburses patients according to dollars spent on dental care, not type of treatment received. It allows the patient complete freedom to choose any dentist. Instead of paying monthly insurance premiums, even for employees who don’t use the dentist, employers pay a percentage of actual treatments received. Moreover, employers are removed from the potential responsibility of influencing treatment decisions due to plan selection or sponsorship. DR is the American Dental Association’s (ADA’s) preferred method of financing dental treatment.

II.  Indemnity Plans

An indemnity dental plan is sometimes called “traditional” insurance. In this type of plan an insurance company pays claims based on the procedures performed, usually as a percentage of the charges. Generally an indemnity plan allows patients to choose their own dentists, but it may also be paired with a PPO. Most plans have a maximum allowance for each procedure they refer to as “UCR” or “Usual, Customary or Reasonable” fees. A common misperception is that the terms Usual, Customary and Reasonable are interchangeable; they are not. Dentists determine their own Usual fees. The insurance company’s fee schedule is called Customary, but it may or may not reflect the fees that area dentists charge. Insurance companies usually do not disclose how their fee schedules are determined. Reimbursement is made according to the patient’s plan of benefits, usually a percentage of the insurance company’s fee schedule.

 

Managed Care

Managed care is the most common dental insurance today.  It has gradually taken over that spot from the “fee for service” plans above, due to its increased cost savings to the insurance companies.  They have aggressively marketed these plans to their customers as a means of reducing costs through reduced benefit payments.  There are 2 basic kinds of managed care, the PPO, and the HMO.

Let’s take a look at both:

I.  PPO

PPO is an acronym and stands for “Preferred Provider Organization.”  A PPO plan is regular indemnity insurance combined with a network of dentists under contract to the insurance company to deliver specified services for set fees and according to the provisions of the contract. Contracted dentists must usually accept the fee schedule as dictated by the plan. Patients who see a non-contracted dentist may incur a greater out-of-pocket expense.

Now it’s very important to note that the patient who goes out of network may incur greater cost going out of network, but this is often not the case.  In many cases the PPO plans that allow benefit out of network will then accept the dentists full fee and cover it at their regular percentage, resulting in a higher overall benefit.  If the PPO does not have an allowance for out of network benefits then the patient must go to an in network provider or pay 100% of costs.  In many cases that we have worked with over the last several years the plans are structured so that staying in network results in a savings to the insurance company only.  For most cases the patient will pay the same or less going out of network for a plan that allows it.  Thus, the motivation for the insurance company to keep patients in network is usually not to save the patient money, but to save themselves benefit payouts.  We will talk in a later issue about why these plans are becoming so popular among employers offering benefits.

II.  HMO or DHMO

A dental health maintenance organization (DHMO) is a common example of a capitation plan. Under a capitation plan, contracted dentists are “pre-paid” a certain amount each month for each patient that has designated or been assigned to that dentist. Dentists must then provide certain contracted services at no cost or reduced cost to those patients. The plan usually does not reimburse the dentist or patient for individual services and therefore patients must generally receive treatment at a contracted office in order to receive a benefit.

This is the most undesirable of dental insurance plans, but it is often the most tempting to offer for employers.  The premiums paid by an employer enrolled in an HMO are significantly less than any other insurance plan, thus it seems like the best option.  The difficulty with these types of plans is that they create a conflict of interest for the dentist/provider.  The dentist is pre-paid a set amount each month to care for that set number of patients on the plan.  These patients must go to this provider only; they have no other option to receive benefits.  The dentist must provide services under contract at virtually no charge to these patients.  Thus, the motivation for the dentist becomes to treat as few as possible of these patients, or to treat them in the fastest time possible, and to use the cheapest materials possible.

Many dentists involved in these plans are very ethical, and so treat these patients with the same high quality standards use to treat all of their patients.  Those dentists that insist on quality, quickly discover that the profitability of this kind of plan is non-existent, and many drop the HMO plans out of necessity to avoid financial ruin.  Those dentists that do make HMO plans profitable must do so by using methods of scheduling and treatment that many consider unethical.

That is your run down on which kind of insurance you have!  If you would like more information, or would just like to ask a question, call our office at (602) 993-0909 or send us a contact email from the “request an appointment” button or this link  http://www.moonvalleydentalcare.com/dentist-appointment-phoenix-az/at

You can also message Dr. Easton through the Moon Valley Dental Care Facebook Page