“But I thought my cleanings were covered at 100%!”

That¹s what patients call to tell us when they get a bill for the balance on their periodic examination and cleaning appointments. Some are quite mad, and accuse us of ripping them off. They remind us that the insurance card in their hands plainly states “100% coverage for preventive treatment.”

What is going on? To understand, one has to grasp how the shell game of dental “insurance” has evolved over the years.

In the first generation of dental benefit plans, reimbursements were based on something called “UCR” fees. UCR stands for usual, customary, and reasonable. Fees were based on a percentile of real fee surveys within zip codes. They had a real resemblance to fees charged by dentists in the community. Sure, some insurance companies gamed the system by not updating their UCR fees with any regularity. But by and large, when insurers promised patients “100 coverage for preventive treatment,” the claim was generally correct.

In the second generation of dental benefit plans, called PPOs, fees were still based on some sort of UCR ideal. These plans were concocted to save employers money. They promised to deliver patients to dentists who participated (by signing slanted contracts) with plenty of patients, provided the dentists billed 20 to 30% less for procedures. Often this was the dentists¹ whole profit margin, so most resorted to procedure upcoding and other antics to make up the difference. The dental insurance companies really did not care. The important point of these plans was that they penalized patients for choosing their own dentists. A cleaning covered at 100% at a “participating” dentist would be covered at only 70-80% by a freedom-of-choice dentist.

In the latest generation of dental benefit plans, employers have flexed their muscle with dental insurers. Many now only pay companies a per-claim fee for administration, typically $5 or less. Employers now designate any “allowable” fee they wish, based solely on a cost target for their company. In these plans, any fee whatsoever can be designated for any procedure. For example, an employer can set $25 as an “allowable” fee for a dental cleaning, even though no dentists in the US may charge so little. The fee is merely a fairy-tale price concocted on the whim of the employer.

Meanwhile, the card given the employee still says “100% coverage.” But sadly, when employees use the benefits, they may discover the plan only covers $25 of a $90 cleaning. Few employees truly understand what is happening, and their anger is deflected onto the dentist. Instead, they should blame the employer, who is playing a deceptive shell game with its workers.

The whole driver of these shenanigans is the desire by employers to save benefit dollars. We can certainly empathize with that goal in this difficult economy for business. However, we think honesty with employees is a better path than deception. The honest thing to do would be to cut the benefit maximum, or lower percentage reimbursement for dental services. Unfortunately, that makes it a lot more obvious to employee-patients that benefits are being cut. Thus, the deception of employer-proscribed low “allowable” fees goes on.

We remind our patients once again that dental “insurance” is an inefficient contrivance born in an era of high marginal tax rates. The crucial test of your dental plan is whether it pays out more in benefits each year than the premiums you pay for it. With employers cutting benefit plan subsidies and at the same time lowering “allowed fees,” fewer and fewer dental plans are worthwhile. It seems remarkable, but if an employee is covered by a FLEX benefit or 125S Cafeteria plan, it is usually more economical to drop the dental benefit plan. Paying for dental expenses by a FLEX or Cafeteria plan is more efficient, and gives you complete freedom of choice in choosing dentists!

by Kim Henry, D.M.D.

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