An overview of Dental Insurance
in the United States of America
by
Dr Kimberly Loos
There are two basic types of dental insurance, closed panel and open panel, in the United States. Open
panel, which includes indemnity ("fee for service") and direct reimbursement, allows the patients to chose
any dentist he or she wishes to see. Closed panel, which includes capitation, PPOs (preferred provider
organizations), and EPOs (exclusive provider organizations), has a list of dentists from which the patient
must chose.
Indemnity (fee for service) Insurance
This type of insurance coverage allows the dentist to set and charge his or her own fee. It is not a fee
mandated by the insurance company; however, some insurance companies will only pay on a UCR
("usual, customary, and reasonable") payment schedule. This payment schedule is usually based on
average fees in the area in which the dentist is practicing. The insurance company will then pay a certain
percentage of the fee charged by the dentist. For example, a typical percentage might be 100% for
preventative care. This includes cleanings, x-rays and exams. Basic care, which usually includes fillings
and extractions, might be covered at 80%, and major (e.g. root canals, crowns, bridges, dentures) might
be covered at 50%. So a patient will pay nothing for preventative, 20% of the fee for basic care, and 50%
of the fee for "major" procedures. Usually, there is a limit to how much total money the insurance company
will pay out in a single calender year. For example, from January 1 through December 31 of a given year,
the insurance might have a limit of $1000. If a patient must exceed this maximum paid by the insurance,
the remaining balance comes from the patient's pocket. Sometimes, if we plan carefully, we can do some
work one year and finish the work during the next calender year. Also, occasionally, a once a year payment
called a deductible, usually $25 or $50, is required.
Capitation
This is a closed panel type of insurance. An DHMO (dental health maintenance organization) is an example
of a capitation program. Once patients have decided on a dentist from the list provided, the dentist is paid on
a per capita (per patient) basis and not for actual treatment rendered.
Dentists participating in a capitation program receive a set monthly fee based on the number of patients
which are signed up for his or her office. Co-payments might also be required under certain plans. The
plans are structured such that there is usually a predetermined level of benefits for the patient. Only
selected treatments are covered; therefore, it becomes the patients responsibility to pay for treatment not
covered by the plan. Patients should also be aware that monies received by the dentist, including the
co-payments, may not be enough to cover the costs of providing the care.
Preferred Provider Organizations (PPOs)
Again, the patient must choose from a list of dentists who have signed a contract with the insurance
company agreeing to charge less than the usual fees to treat a specific patient base. A patient may be
able to choose a dentist not designated as a "preferred provider", but that patient may have to pay a larger
fee to their chosen dentist. These programs can be limited in the procedures they will cover and they
dictate the fees. Again, the fees dictated by the programs might not even pay the bills of the dental office -
especially if state-of-the-art, quality materials are used.
Exclusive Provider Organizations (EPOs)
In this plan, patients can only see participating dentists. If a non-participating dentist is seen, the patient
will be responsible for the fees charged by that dentist. Usually, participating dentists are required to offer
substantial fee reductions and there are a limited number of providers within a certain geographic area.
Other restrictions may include limited or no care by a specialist and limited care received in a given year.
Direct Reimbursement
This is a self-funded plan in which an employer pays for the dental care out of a special account. With this
program, the insurance companies ("middleman") are actually cut out; thereby, reducing administrative costs.
Instead of paying a premium to an insurance company to pay for each employee, the employer can put
this money into a special fund for dental care. When an employee visits the dentist, the employee pays the
fee to the dentist and receives a receipt for payment and services rendered. The employee then submits this
receipt to the employer and is reimbursed out of the dental fund. This fund can be run the same way an
insurance policy is run with certain percentages and yearly caps. Usually, no limits exist for services provided.
This type of coverage helps the patient and dentist select the most appropriate treatment.
Dr Kimberly Loos e-mail: mailto:dentist@smiledoc.com
web: http://www.smiledoc.com/dentist
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