Dentist Update: 28 States Considering Legislation on Dental Insurance Fee Capping

Dental insurance fee capping
Our latest survey revealed that 98% of dentists oppose dental insurance companies setting fees for services they do not offer. [Check out the insurance fee setting survey results]

Known as fee capping, this practice has upset dentists nationwide – and legislators have taken notice. According to the AGD, this year, “a total of 28 states introduced 46 pieces of legislation to stop insurance carriers from requiring dentists to accept caps on fees for services the carrier does not cover.

It would seem that more and more dental insurance carriers are moving into the arena of discount dental plans. The insurance companies are trying to negotiate discounts on services they don’t cover. Perhaps they’re getting ready to try both sides of the equation?

It’s important to note that discount dental plans are monitored separately from dental insurance plans. I don’t know what will happen, but I expect it will be interesting…

The AGD provides additional explanation:

Putting Caps on Fees for Non-Reimbursed Services

Several major dental benefits carriers are adding language to provider participation agreements to allow them to set fees for dental services that they do not pay for, i.e., non-covered services. That is, if a dentist agrees to the contract language, he or she will be required to charge the patient what the carrier has told him or her to charge even when the carrier will not pay for the service.

To enact a fee cap on non-covered services, a dental benefits carrier must amend the current contract it has with its existing providers. Here’s an example of such an amendment:

Dentist may bill a Member for non-covered services (which are defined as any service for which no payment is made under the applicable plan or arrangement for any reason, including but not limited to, services in excess of contractual maximums, services not covered under plan design, and services denied due to contractual limitations). Dentist’s charge to Member for non-covered services may not exceed the Maximum Allowable Charge for the applicable CDT code as specified in the most current Maximum Allowable Charge schedule. Fees for all non-covered services will be collected from the Member, and not billed to the Carrier.

Note that this is just one of many variations of such a provision that you may find in your participation contract. The provider then has the choice of signing the new contract, thus accepting the new fee caps, or terminating his or her contract. If the provider elects not to sign, then he or she will be excluded from the provider networks presented to patients by that carrier’s dental plans.

What are the non-covered services?

Non covered services are those services that a patient’s dental plan has chosen not to pay for. Note that a carrier may offer numerous dental plans. Often however, dental plans without coverage for expensive, cosmetic, or other dental services are cheaper for employers to purchase for their employees. This is especially attractive to employers in the current economic climate. Each dental plan may have a different list of non-covered services, and therefore one cannot specify any particular services as universal ‘non-covered services.’

Rationale of carriers enacting such policy

To stay competitive with one another, dental benefits carriers use the argument of market pressure or gaining a marketing advantage as one of the reasons they are implementing this policy. Market need, the carriers assert, is being driven by patients who can save money on services not covered by their dental benefits plan and see value in limiting their out-of-pocket expenses. However, limiting dentists’ charge to patients for non-covered services allows these carriers to market their dental plans as costing patients less without bearing any of the financial risk of the discount; that is, these carriers gain the marketing advantage by shifting the risk to the providers. Therefore, the market trend will drive all carriers to implement similar restrictions in order to avoid a competitive disadvantage. Accordingly, any legislation enacted against the practice of fee-capping for non-covered services must be sufficiently broad to prevent all carriers from engaging in this practice.

Impact to Patients and the Practice of Dentistry

As primary care providers of oral health care, general dentists strive first and foremost for access to quality care for all as the ultimate goal of the profession. However, to serve its patients, a dental office must be viable and sustainable. Today, more patients than ever rely upon dental insurance to be able to afford oral health care. Studies have shown that, without dental insurance, far fewer persons will choose to see a dentist. Understandably, in the present economy, each of us must make cutbacks to our expenses in order to survive. Public awareness and understanding of the impact of oral health on systemic health issues such as diabetes and cardiovascular afflictions is still at its fledgling stages. Therefore, out-of-pocket expenses for oral health are often among the first to be avoided by the public.

Concurrently, businesses including those of dental benefits carriers and employers are also seeking cutbacks. Carriers striving to maintain or increase their revenues and marketshare in this economy offer employers cheaper plans for their employees by covering fewer services and paying less than true market value even for those services they cover. However, by covering fewer services, carriers compel patients to pay for more services out-of-pocket, which they may be unable or unwilling to do. Second, by paying less for the services they do cover, carriers compel dentists to function at a net loss when providing these covered services.

Therefore, today’s dentist must often rely upon billing at market rates for non-covered services to compensate for the loss he or she absorbs in accepting paltry fees from carriers for covered services. However, unlike the carriers’ actions of limiting services they cover, the dentists’ actions do not impose an undue burden upon patients. Here’s why. In the absence of fee-caps for non-covered services, dentists work with each patient on a case-by-case basis to charge what each patient may be able to afford with an understanding that some patients may be able or willing to afford more than others.

Fee capping takes away this opportunity! If fees for non-covered services are capped across the board without regard to what each patient can afford, the practice of the participating dentist may become unsustainable. The result may be two-fold. He or she may no longer be able to offer that specific service to that carrier’s patients, thus limiting the patients’ treatment options. In some markets, providers may feel compelled to stop participating with certain carriers in order to survive. In either case, the patients would face decreased access care.

Call to Action

AGD is currently tracking legislative activity in all states, including fee capping legislation. To see whether your state has a fee capping bill, please click here. The AGD’s Legislative & Governmental Affairs Council and the Dental Practice Council have also approved a legislative lobbying guide called a ‘toolkit’ for AGD constituents. The toolkit will help constituents push the passage of state laws to stop insurance companies from capping fees for services they do not cover. The AGD asks you to contact and work with your constituent organizations to help them use the toolkit to lobby for these state laws. Several states have already introduced legislation to prohibit fee capping by insurance carriers; AGD members are asked to contact their legislators to encourage them to pass this legislation. Click here to see if your state has an action alert on fee capping, or to find your state’s elected officials.

AGD Advocacy: Caps on Fees

Dentists: what are your thoughts on the subject?


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