Financing your dental care can come in many different forms and can range from self-funded fee-for-service dentistry to comprehensive employer-provided dental plans. Although dental fees may appear high to some people, they are usually rather competitive, with most prices reflecting the experience and competency of a dentist. When you consider the cost of dental school, various licenses for practicing, numerous overheads, taxes, and, of course, some form of profit, it soon becomes clear that most fees are proportionate to the cost of running a dental practice.
With these points in mind, let’s take a look at the more common types of managed care programs in dentistry.
Before dental plans and insurances were introduced to allow patients to spread the cost of dental treatment, fee-for-service was the only form of payment for patients requiring dental therapy. It works in just the same way as ordering food at a restaurant, allowing a patient to pick and choose the level of care they want at a price they can afford.
This form of oral care is still available and is known as fee-for-service dentistry. Many dentists only accept this type of payment, which can provide the patient much greater control of their oral care. Patients choose their dentist, save money for their treatment and then pay for it. They then receive therapy based on their budget and personal needs. These days, however, fee-for-service dentistry only makes up a small portion of financial contributions for dental therapy.
Many fee-for-service dentists will accept dental insurance as a part-payment towards their services. However, certain dental plans will not allow you to receive dental treatment from fee-for-service dentist – instead requiring you to receive treatment from their list of preferred providers.
Although the majority of high-quality dentists will practice fee-for-service dentistry,
Fee-for-service dentistry is often the only form of payment type that allows dentists to perform the high-quality care they are known for. Insurance-only payment can often restrict the quality of care a dentist can perform. Fee-for-service and dental insurance as accepted forms of payment can sometimes reflect the level of care a dentist can provide. With this in mind, it is advisable to analyze all possible reasons why a dentist participates in a particular insurance plan.
Dental Health Maintenance Programs (DHMOs)
Much like medical HMO plans, DHMOs are set up to provide a minimal amount of dental care. Your employer will have contracted with a dental insurance company to provide discounted oral care for all of their employees, and usually these plans only cover emergency treatment and a few basic procedures. In almost all circumstances, DHMOs do not cover elective or advanced treatments, such as:
- Dental implants
- Complex crowns
In general, because of the highly discounted fees, the level of care you receive when using DHMO as your payment type will differ greatly from the care received from the same dentist when using their fee-for-service payment option. Similarly, you will likely find it difficult to obtain many of the services you require or appointment times that suit you.
Despite these difficulties, there are many reasons some dentists choose to accept DHMOs. They provide a dentist with a specific payment for a specified period of time, and receive this payment whether they provide treatment to those on the plan, or not. This can affect the likelihood of a patient receiving an optimal level care, as the dentist will have less of a financial incentive compared to patients paying normal fees.
Most quality-oriented dental practices won’t accept DHMOs as payment, as the reduced financial incentive can affect their inclination to provide the high quality level of care they’re renowned for. Because of this, the number of patients involved in DHMOs has been declining in recent times.
Preferred Provider Organizations (PPO)
PPO as payment for dental therapy has become more popular recently, and works similarly to how DHMOs work. The main difference is that the dental companies that connect with employers will make contracts with certain dentists to be their ‘preferred providers’.
Patients usually receive a 20% discount off the practitioner’s usual fee, but the rate of discount can vary – sometimes more, sometimes less. These plans typically limit the types of treatments a patient can receive, with the amount a dentist can charge capped at a certain amount. PPO as a payment type contributes 20% towards the maximum a dentist can charge for their services.
The amount a dentist receives in fees is significantly affected by various overheads and taxes. For example, a $100 fee may appear high when compared to the time it takes to complete a procedure. Overheads account for around 70% of that fee before taxes are applied to the remaining $30. However, when PPO is applied, the overheads do not change, so when a 20% discount applies, the dentist receives $80 instead of $100. Taking away the $70 or more in overheads to serve the patient from that $80 after the discount is applied, the dentist only receives $10 before taxes are applied. Because of this, it is necessary for most dentists to focus on fee-for-service dentistry in order to make a profit and stay in business.
Participating in PPOs often requires dentists to cut costs and employ more staff to cover the extra workload in order to maintain a good level of quality care. While at first glance it may appear that patients benefit from PPOs, it is in fact the insurers who benefit the most from this form of payment.
Thankfully, there are other, less restrictive forms of dental plan that can contribute towards your dental fees. The following 3 types of payment provide patients which much greater choice when it comes to types of treatment and their providers.
Indemnity Dental Insurance Plans
Because they’re funded over many years, Indemnity Dental Insurance Plans has made dental care more accessible to the American public over the last few decades. Occasionally, the insurance company will allow co-payment if it does not cover the full treatment cost. Other plans only allow the dentist to charge a set fee, of which the insurer pays a portion.
Despite making dental services more easily accessible, these types of plans have dropped in popularity with both patients and dentists, as insurance companies have been reducing the amount they will pay out for certain services.Although this can make these plans appear to be discounted PPOs, for the most part, indemnity insurance plans have shown to be a favourable payment option for dental services.
With this type of benefit plan, it’s not just the insurance company that benefits, but the patent and the dentist. Here’s how it works: Let’s say your company will provide $2,000 for your dental care per year. Typically, you receive the services of your choice from your dentist of choice. Although the services must be in line with your employer’s specifications, the requirements are often very liberal and much less restrictive than some other types of plan. You pay your dentist for services and receive a receipt to provide to your insurer who will reimburse the cost up to $2,000. This does mean that you have to pay the entire cost of the services yourself, which some consider a disadvantage, but the amount will be reimbursed.
Other than a few exceptions, this type of plan is very similar to Direct Reimbursement. Usually, your employer contracts with a local bank, and funds the bank with a specified amount they choose to spend on dental benefit plans. After receiving dental therapy from an authorized dentist, your dentist then submits a bill to the bank. This type of plan has proven to be incredibly popular as there are much fewer restrictions, and no upfront cost to the patient.
Overview of Dental Benefits
Of all the types of benefit plans available, Fee-for-Service Dentistry is expected to remain and slightly increase in popularity. This is most likely due to the extra freedom provided by this payment type. For those less picky about the dentist they choose and the type of service they receive, Direct Assignment can provide a degree of freedom while also eliminating any upfront costs.
The Ideal Delivery System
This checklist of characteristics makes up the ideal delivery system for funding dental services. Check your benefit plan to see if it provides the following:
- Patient ability to select dentist
- All procedures included
- Patient ability to pay extra costs over plan payment
- Simple & straightforward claim forms
- Rapid payment of claims by company
- Dental society partnership in plan administration
- Dental society dominance in treatment plan review