My last column on the subject of dental managed care was published six years ago.1 At that time, dental practitioners hoped that by some miracle, the concept of managed dental care would vanish. That has not happened. Medical managed care has had an enormous evolution, but it has stabilized somewhat. However, discontent with managed care is expressed by medical patients and physicians nationwide and can be found in the newspapers nearly daily. Most of our medical colleagues have been forced to join with the companies that administer managed care.
Dental managed care has changed significantly in the past six years as well, but dental practitioners have not had the same coercion to join managed care plans as have physicians. It has not destroyed the profession as some predicted, but it has caused many changes in dental practice—some good and some not so good. This article provides my observations on the current state of dental managed care in the United States, based on available statistics and on my own opinions gleaned from speaking to practitioners across the country.
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TYPES OF PAYMENT FOR DENTAL SERVICES
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Fee-for-service dental care has been the major method of dental payment preferred by most U.S. dentists. However, about 162 million people, or 58 percent of the U.S. population, participate in one of several types of payment plans.2 The approximate percentage of participation in the several types of dental payment programs is as follows2 (pp325–6):
- – dental health maintenance organizations, or DHMOs: 16 percent;
- – dental preferred provider organizations, or PPOs: 34 percent;
- – dental referral networks: 13 percent;
- – dental indemnity programs: 37 percent.
Following is a description of the programs and their characteristics as of 2003.
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DENTAL HEALTH MAINTENANCE ORGANIZATIONS
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The concept of DHMOs has not been highly successful in dentistry. Some obvious reasons for their relative lack of acceptance are limitations on the patient’s choice of practitioner; limitations on the type of treatment provided; the low benefits and the bare-minimum amount of funding available; lack of access for patients to busy practitioners who are treating the many patients they are committed to treat; and the fact that in many DHMOs, dentists have had difficulty earning enough profit to support their families. While speaking with some dentists who have tried to support their practices with DHMO patients, I have heard about many pathetic financial situations. Some of these dentists report reasonable gross income from their participation in DHMOs, but their expenses, necessitated because of the many patients they must treat in DHMO plans, have reduced profit to an unacceptable level. Many have joined DHMO plans only to drop out after discovering that their net income was too low—or was nonexistent.
When the National Association of Dental Plans surveyed 33 participating dental plans in 2001, it found that DHMOs accounted for about 12 percent of the total dental sales reported to that time.3
Dr. Donald S. Mayes, 2 in his excellent book on managed dental care, summarized the lack of success of DHMOs with the following statement: "Well-managed quality DHMOs could not compete in price with ‘unethical’ DHMOs that increased their profits and reduced their risks by limiting access, and limiting and withholding treatment. Patients were oversold on DHMOs and expected total coverage with minimal or no co-payments. Purchasers have more employee dissatisfaction in DHMOs than in PPOs."
In speaking with practitioners, I have learned that their satisfaction with DHMOs is markedly less than that with other types of plans. I have difficulty finding anything positive about these types of plans, other than that basic dental care may reach a few people who would not receive it otherwise. I predict that DHMOs will gradually reduce in number as other types of plans replace them. That has certainly been the trend to date.
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PREFERRED PROVIDER ORGANIZATIONS
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PPOs have become relatively popular with companies seeking dental benefit plans for their employees. Undoubtedly, part of their success is related to the fact that they receive fewer complaints from patients than do DHMOs—because they give patients more treatment options and better access to care. What are the characteristics of such plans today? They pay low or moderate fees to dentists, and they offer more access for patients than do DHMOs. To dentists who are not as busy as they would like to be, PPOs offer the opportunity to fill empty treatment rooms. Dentists do not have the risk of having too many patients to treat, as they do in DHMOs.
However, since fees in many of the plans are still substandard, a participating dentist’s income must be augmented with fee-for-service patients. Patients in PPOs must go to dentists who are members of the plan, and who will accept the fees and other conditions offered by the company. Many procedures are not permitted in the plans. Nevertheless, PPO plans are continuing to grow in acceptance by patients and dentists. They grew by 14 percent in 2000.2
In my candid opinion after many years of practice, most of these types of plans are too limiting and too low in payment to dentists to allow optimum treatment and predictable accomplishment of quality dental therapy. However, they certainly offer more to dentists and patients than do DHMOs.
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INDEMNITY PROGRAMS
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Indemnity programs are the old standbys. These are the plans that most mature dentists and patients know as "dental insurance." We know them well and have learned to accept and respect them. Most of these programs offer patients a relatively broad range of treatment at moderate fees. Dentists have learned to work with most of these plans, but changes in policies are making it more difficult to work with some indemnity companies. Some companies have reduced fee structures, which makes their "indemnity" program fees resemble the relatively low fees of some PPOs. Additionally, these plans are decreasing in number; in 2000 they dropped by 8 percent.2
Are dental indemnity programs going to be replaced by PPOs? At this time, although they are declining, they still have a major market share—about 37 percent—of dental payment plans.2 Their advantages are well-known to dentists and patients. I see these plans continuing in popularity because of the numerous disadvantages of the other types of plans.
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DENTAL REFERRAL NETWORKS
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Dental referral networks have been called reduced fee-for-service plans. The plans give their participants reduced fees for care provided by a network of participating dentists. The dentists pay a periodic fee for this service. Patients who do not have an association with an organization offering a dental plan benefit often seek out this type of plan. Patients pay dentists directly. The plans provide a reduction in fees for patients, and an increase in patients for dentists. A significant drawback to these plans is that the patient must seek out a dentist who participates in the network.
I feel that these plans will continue to grow and serve the public, and because they have fewer restrictions than some other types of plans, they will remain attractive to people who do not have access to other types of dental plans.
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DIRECT REIMBURSEMENT
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What has happened to direct reimbursement? As you remember, direct reimbursement plans allow companies to designate a sum of money for their employees and save it to be used to reimburse employees as they have their dental services provided. These plans involve very little administrative cost, allow patients to choose their own dentists and, in most cases, allow patients almost total freedom in choosing services. Direct reimbursement has been supported by organized dentistry for many years.
I was pleased to see a recent article on this subject in a publication called Managed Dental Care (visit "www.nhionline.net" for further information on this newsletter).3 This is one of the first positive articles I have seen on direct reimbursement that has not come from organized dentistry. The newsletter’s staff surveyed the publication’s subscribers, and the results were very interesting. The following information is abstracted from the cited publication. Many of the comments are from officials in companies using direct reimbursement as their dental payment plan, and their names are available in the original article.
- – "Direct reimbursement allows us to have direct knowledge of where our money is being spent, and so far the knowledge has been a pleasant surprise."
- – "Overall, we’ve seen very little in the way of increased costs, whereas with an insured plan we would have had increases every year."
- – "Employees have the freedom to go to any dentist they choose, and they know ahead of time how much their reimbursement will be since it’s not a specific amount for any type of service—it covers anything that is a dental service."
- – "We really like it because almost everything is covered, and all of the costs of the plan go to providing the benefit."
- – "The plan has run well within budget from day one. In fact, we’ve improved the plan several times because it’s running so well."
An example plan reported in the article pays 100 percent of the first $100, 70 percent of the next $100 and 50 percent of the next $1,600 for a maximum of $1,000. When asked what the managed dental care plans in an eastern state would need to do to get the business of a large company to change from direct reimbursement, a company administrator said, "I doubt that we’ll ever revisit it. There’s nothing wrong with direct reimbursement to revisit."
All I can say is that I agree without any reservations. It is our task as representatives of organized dentistry to educate our local and national companies about direct reimbursement. Try to find one plan in this article that can compete with direct reimbursement. The comparison speaks for itself.
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SUMMARY
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About 58 percent of the American population has some type of managed dental care that pays for some, not all, dental care needs. Unlike the medical profession, the dental profession has not been devoured by managed care, but there is no question that managed care plans are here to stay.
The various types of managed care programs are changing every day. The trend is for DHMOs and dental indemnity programs to decrease, DPPOs and dental referral programs to increase and dental reimbursement programs to grow slowly as more organizations become aware of their benefits. Plans vary from excellent to poor in their service to patients and their dentists. We dentists must learn to live with them and to educate our patients about the advantages and disadvantages of each.
I am pleased to observe that fee-for-service dentistry, although challenged, is still very alive and strong and serving the public with the same high quality and freedom of choice for which American dentistry has always been known.
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TYPES OF PAYMENT FOR...
DENTAL HEALTH MAINTENANCE...
