How Dental Fees are Determined and What You Can Do

Dental insurance is the single greatest factor that affects our industry. A number of resources report that nearly 50 percent of all Americans are covered by some type of privately financed dental insurance plan. Some plans are obviously better than others, but they all have one thing in common: They all understand that dental disease is preventable. Today’s dental plans are structured to encourage their members to get regular, preventative maintenance treatments, which is vital to diagnosing the onset of a serious dental disease. 

Dental insurance coverage is divided into four classifications: 

• Class I services encompass x-rays, teeth cleaning, preventative care, etc. Services are typically covered 100 percent by the insurance plan to address issues before they advance, if the fee is usual, customary and reasonable. 
• Class II services consist of fillings, composites, root canals, and some periodontic treatment.  They are covered up to 80 percent of the fee, if it is usual, customary and reasonable.
• Class III services include crown and bridge and dentures. They typically cover up to 50 percent of a dentist’s fee, if it is usual, customary and reasonable.
• Class IV services include all orthodontic services. Like Class III coverage, most plans cover up to 50 percent of a dentist’s fee, if usual, customary and reasonable.

What is usual, customary and reasonable? That is the $64,000 question. Who deems a doctor’s fee as usual, customary and reasonable (UCR) and what is not?

A dentist can charge whatever he or she chooses for their services. Because the vast majority of crown and bridge cases coming across your bench are covered by dental insurance, it is insurance companies who review the claim and it is insurance companies who determine if a submitted fee is UCR or not. This leads to more questions: 

1. How do they do it?
2. How much? 
3. How do insurance companies track claims?

For the answers, we have to go back nearly 40 years. In 1973, health insurance companies formed an association to look out for the interest of their industry. This lobbying and servicing arm was first called HIAA (Heath Insurance Association of America). To give you a comparison, HIAA is to the insurance industry what the ADA is to dentistry except the HIAA dwarfs the ADA in size and political influence (i.e. money).

HIAA operated within a coalition of health care organizations with the mission of simplifying the administrative process of the industry and protecting its members. In 2003, HIAA merged with the American Association of Health Plans.^1,2,3,4 These two companies now go under the name of America’s Health Insurance Plans or AHIP and it is both a trade association and a very powerful political advocacy group. For instance, AHIP has spent more than $30 million dollars on lobbying efforts from 2005 to 2009, according to the non-partisan Center for Responsive Politics.⁵

Today, AHIP has nearly 1,300 member companies that provide health care coverage to more than 200 million American participants.⁶ Included coverage includes medical insurance, long term care and supplemental insurance, disability, and of course, dental insurance.

When HIAA first came on to the scene, one of their first orders of business was to compile physician actual fee data as a service to its members. HIAA collected this data, compiled submitted and paid fees from these charges, and then fed this data back to its members for a fee. The more data that was submitted to HIAA, the less it cost the specific insurance company to receive data that encompassed data from all of HIAA’s participating members as well as themselves.⁷

Insurance companies then used HIAA’s data to formulate their own UCR fee schedules to determine the going market rate specific to a geographic area. This specific area for claims data analysis is called a GEO-Zip. A GEO-Zip encompasses the first three digits of a U.S. postal zip code (i.e., 328XX for Orlando, Fla., 142XX for Buffalo, N.Y.). HIAA.'s data kept track of all medical and dental services (using ADA Dental codes and nomenclature) that were submitted to HIAA for each and every GEO-Zip in the United States. In other words, HIAA kept track of the all of the fees submitted to address this very question:

“What is the going reimbursement, for a given procedure, in a given geographic area?”

HIAA provided publications of their collected data only to its members for both medical and dental services. The dental services arm was called the Dental - Prevailing Healthcare Charge System, or Dental PHCS Medical procedures had their own database. Since 1974, this was how leading insurance companies deemed a medical/dental service as UCR or not simply by looking at the insurance claim against a huge database of submitted claims from a given area.

In 1998, HIAA sold their complete medical and dental UCR data systems to Ingenix Inc., a wholly owned subsidiary of United Health Group. This raised eyebrows in the insurance industry as Ingenix already owned Medical Data Resource (MDR), which they acquired only a few years earlier in 1997.  MDR was the primary competitor to HIAA’s PHCS database. Both MDR and PHCS’s databases were the only two national data bases that were used for more than 20 years that priced out both millions of medical and dental procedures.⁸

For the next 10 years, all was fine for Ingenix - at least as far as most insurance companies were concerned. Ingenix continued to produce UCR data for insurance companies and they started to merge data contributors into one data pool, but differences in data collection and reporting was pretty much the same. Its product was the same, but with a larger data pool to measure claims against. A larger data pool ensured insurance providers that UCR data was current and accurate. 

Sure, physicians and dentists complained at times and consumers railed at the low reimbursement paid by insurance companies who cited this proprietary UCR data, but the complaints didn't really make that much difference - until New York State Attorney General Andrew Cuomo got involved. The problem arose when a few patients in New York complained about the amount they still owed providers after their insurers had paid their portion - using Ingenix's own UCR data. After a lengthy investigation, Cuomo found reason to charge United Health Care, who owned Ingenix.

Avoiding a long and costly legal battle, Ingenix settled with New York in 2009. Ingenix had to cough up $50 million to help fund development of an independent charge database by a not-for-profit group.⁹ 

That leads us to today. FAIR Health is now the new independent, non-profit organization that materialized after the settlement with Ingenix. They are now providing UCR data for consumer examination and review.¹⁰  With real data at their reach, consumers are now able to get a very good idea what UCR fees are for your most common medical and dental procedures throughout the country.  Even with FAIR Health providing their own UCR data to consumers, Ingenix is still publishing their UCR data for both medical and dental procedures. If you want the UCR data from Ingenix, you have to pay for it and they only provide data per GEO-Zip.   

The bottom line is that the insurance company deems if a service is UCR or not - not the dentist, and certainly not the patient.

Let’s take a look at a real world example using this data. What is the going UCR dental fee for an e.max crown (ADA Code D2740) compared to a traditional restoration like porcelain to high noble (ADA Code D2750)? What is a reasonable fee and what is not?

Click here to see the UCR fees for an e.max crown (D2740) vs. PFM – High Noble (D2750) in the Orlando-metro GEO-Zip area.

The amount of reimbursement depends on the specific dental plan but one thing is certain, the insurance companies have set limits on the amount paid for any dental/medical procedure and continue to use this UCR data that is collected for their use. If a plan pays up to the 80th percentile level, that means 80 percent of the UCR fee is determined by the insurance company, not the actual fee charged by the dentist. This means that the insurance company will pay up to the 80th percentile of submitted/paid fees (whichever is less) as compiled by the insurance industry themselves.

Sure, there are times where your dentist’s fee may not be usual and customary, but then again, there are many times when your dentists may be undercharging for their procedures and hurting his or her profitability. In the above example, if a dentist’s fee for a D2740 e.max procedure was $1,000 and the patient’s plan would have paid up to the 80th percentile or $1,080 (see chart), the insurance company would have paid it. They would never inform the patient or dentist they would have paid as much as $1,080 for this procedure. 

What if the dentist’s fee was $1,600 for the same procedure? The insurance company would have informed the patient or dentist that this fee is not UCR and will have only paid up to $1,080. The dentist would have to collect the remaining difference from the patient. The patient may complain to the dentist that he is getting overcharged and the dentist may charge back that the patient’s insurance plan is junk. Either way, it puts tension between the patient and dentist while the insurance carrier sits on the sidelines.

Strategy for Dental Laboratories

Offer your accounts choices. Let them decide which of your restorations they want to use as long as they pick one, you are good. Do not ask them yes or no questions when presenting your restorations, give them choices like chocolate, vanilla or strawberry.

Try this: Doctor, we understand that with gold nearing $2,000 per ounce, many of our accounts have asked us about alternatives to metal for both porcelain to metal, as well as full-cast golds. This is what we can offer you: e.max - ADA Code D2740;  porcelain to high noble alloy – Code D2750; porcelain to noble alloy – Code D2752; and, of course, full cast high noble alloy – Code D2790. Which would you prefer for your patients?

Of course the dentist is not going to choose until he/she gets an idea of  how much, so the dentist will more than likely ask, “How much are your crowns?”

Be prepared for that question and remember to keep offering your dentist choices. Offer a handout (as people tend to comprehend numbers and figures better if they see them):

D2740 crown – porcelain/ceramic substrate (i.e., Empress/e.max):  $___ per unit

D2750 crown – porcelain fused to high noble metal: $_____ per unit

D2752 crown – porcelain fused to noble metal: $_____per unit

D2790 crown – full cast high moble metal:  $_____per unit

Note:  Use ADA coding in your fee schedules as this is the exact coding and nomenclature dentists have to use when they submit a case for insurance reimbursement.

As the dentist is looking at his choices, remind him again with something like this: Doctor, keep in mind that it is our experience that the usual, customary and reasonable fees for restorations like e.max under ADA code D2740 are higher than even full cast crowns with high noble alloy (Code D2790).

Then ask the dentist one last time: Which of these restorations would you like to use?

At this point, you may have to educate your dentist on what UCR fees are and how insurance companies use and collect them when covering a dental claim submission. Either way your laboratory would be doing a huge service for your accounts and everything aside, you are helping him or her with their business as well as your own laboratory’s profitability. 

References:

1. Press Release dated December 11, 2003 (retrieved November 13, 2007)
2. AHIP “Smartbrief” announcing merger
3. "Health insurers gain a huge new lobby," New York Times, September 23, 2003
4. Sarah Lueck, "Two health trade groups to merge,", Wall Street Journal, September 23, 2003
5. http://www.opensecrets.org/lobby/clientsum.php?lname=America%27s+Health+Insurance+Plans&year=2009 AHIP profile, Center for Responsive Politics
6. AHIP, Accessed 6 April 2007
7. Ingenix Benchmarking Databases – Product Sheet
8. U.S. Senate Staff Report for Chairman Rockefeller, “Underpayments to Consumers by the Health Insurance Industry, 6/24/2009
9. NYAG’s Office Press Release, 1/13/2009
10. William Kates, "FAIR Health" Database Will Allow People To Compare Health Care Costs”, (AP), 10/27/09