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Dental Benefits 101. January 30, 2008 Presenter: Sara Zook. Today’s Topics. A Brief History Description of Types of Plans Indemnity HMO PPO Network Considerations Reimbursement Differences. A Brief History. A Brief History.

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Dental Benefits 101

January 30, 2008

Presenter: Sara Zook

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Today’s Topics

  • A Brief History

  • Description of Types of Plans

    • Indemnity

    • HMO

    • PPO

  • Network Considerations

  • Reimbursement Differences

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A Brief History

  • The dental benefits industry in the U.S. began as a by-product of the health insurance industry.

  • 1954- Nation’s First Dental Plan- Washington State Dental Service Corporation.1

  • In 1962, 1 million people (less than 1% of U.S. Population) were covered by dental benefits.2

  • By 1999, 153 million individuals (56% of U.S. Population) had some type of dental benefits.2

  • Journal of Dental Education, Future Trends in Dental Benefits, 2005 69: 586-594

  • Mayes, Donald S., Dental Benefits: A Guide to Dental PPOs, HMOs and Other Managed Plans, Revised Edition: 2002.

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Dentists Practice Differently

  • Most Dentists practice individually

    • MDs- 35% practice individually1

    • DDS- 76.6% practice individually2

  • Dentists do not require hospital privileges

  • What does this mean?

(1) Medical Economics, “Do you have the right stuff to go solo?,” Jan. 8, 2001; (2) Journal of Dental Education, Association Report: Trends in Dentistry and Dental Education, June 2001

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Lost work time

Over 164 million work hours (approximately 20.5 million days) and 51 million school hours (approximately 7.8 million days) are lost each year due to dental problems1

Production time lost due to off-the-job injuries totaled about 170 million days; 80 million days were lost by workers injured on the job2

Emergency room costs

People in the 19 – 35 age group have more emergency room visits for dental emergencies than medical emergencies3

80% of dental-related emergency room discharges receive prescription for at least one medication3

Dental Cost Pressures Are Increasing

Indirect costs of dental problems

(1) U.S. Department of Health and Human Services. Oral Health in America: A Report of the Surgeon General. Rockville, MD: U.S. Department of Health and Human Services, National Institute of Dental and Craniofacial Research, National Institutes of Health, 2000; (2) Injury Facts 2003 Edition, National Safety Council; (3) Lewis, Charlotte, MD, MPH, Lynch, Heather MD, and Johnston, Brian, MD, MPH, Dental Complaints in Emergency Departments: A National Perspective, Annals of Emergency Medicine, Volume 42, Number 1, July 2003

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Types of Coverage1

Capitated Dental Plan

  • Pure DHMO

    • Dentist paid on a per capita basis, fixed rate for each individual or family enrolled.

    • Participant must see a DHMO dentist for coverage.

    • Typically smaller networks.

    • Copay schedules.

      Fee-For-Service Dental Plans

  • Indemnity

    • Reimbursement based either on a schedule or UCR.

    • No network.

  • PPO

    • Network of dentists agreeing to accept a discounted level of payment for covered services.

    • Out of Network option, plan design/carrier determines reimbursement level.

    • Typically larger networks.

    • Uses coinsurance.

(1) Mayes, Donald S., Dental Benefits: A Guide to Dental PPOs, HMOs and Other Managed Plans, Revised Edition: 2002.

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Dental Plan Trends

PPOs are the only segment with significant growth over this four-year period1

(1) National Association of Dental Plans. 2005 Joint Dental Benefits Report, Enrollment, July 2005; (2) The significant decline in Access/Discount plans between 2000 and 2002 was impacted by the removal of some health plans previously in this category that included a limited dental benefit.

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Plan Design Components

  • Coinsurance

  • Plan maximums

    • Annual Max and Orthodontia Lifetime Max

  • Deductibles

  • Allocation of services

    • Preventive (Type A/I): Cleanings, Routine X-rays

    • Basic Restorative (Type B/II): Fillings, Periodontics, Oral Surgery, Endodontics

    • Major Restorative (Type C/III): Crowns, Bridges/Dentures

  • Contractual Limitations and Exclusions

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PPO Plan Designs – “Maximum Allowable Charge (MAC)” Plan

This plan is not available in every state on a fully insured basis. Please check with an advisor prior to offering.

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PPO Plan Designs – “Incentive Plan” Plan

This plan is not available in every state on a fully insured basis. Please check with an advisor prior to offering.

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PPO Plan Designs – “Incentive MAC Plan” Plan

This plan is not available in every state on a fully insured basis. Please check with an advisor prior to offering.

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North Dakota



New York






South Dakota


Rhode Island


New Jersey










West Virginia





Washington DC




North Carolina


South Carolina




New Mexico







Extraterritorial states include:

MA, MS, MT and TX.

  • No coinsurance differentials are permitted: No distinction can be made in- and out-of-network coinsurance / benefit

  • Size of differential is restricted: Size of coinsurance / benefit differential in- and out-of-network is limited

  • Coinsurance / benefit differentials are permitted: These states are silent on the subject of coinsurance / benefit differentials

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Allocation of Services Plan

Type A, B, C & D covered services

Type A

Preventive & Diagnostic

Type B


Type C


Type D


  • Fillings

  • Repairs

  • Periapicals

  • Pulp capping/pulpal therapy

  • Endodontics/root canal

  • Space maintainers

  • Palliative care

  • Periodontal maintenance

  • Periodontics

  • Rebases/relines

  • Simple extractions

  • Surgical extractions

  • Oral surgery

  • General anesthesia

  • Consultations

  • Inlays/onlays

  • Crowns

  • Dentures

  • Bridges

  • Implants

  • Endodontics/root canal

  • Periodontics–surgery

  • Oral surgery

  • Simple extractions

  • Surgical extractions

  • Oral exams

  • Full mouth X-rays

  • Bitewing X-rays, periapicals & other X-rays

  • Lab and other tests

  • Prophylaxis (cleaning)

  • Fluoride treatments

  • Space maintainers

  • Palliative care

  • Sealants

  • Orthodontic diagnostics

  • Orthodontic treatment

By reallocating these services, you could save 11%*

*Percentage indicates plan savings off of MetLife’s full block of self-funded/insured

PPO plans based upon analysis of MetLife’s 2004 book of business.

Note: Options may be subject to state regulations.

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Limitations and Exclusions Plan

Lower Cost


More Robust

Fluoride age

Once per 12 months

Space maintainer age

Once per lifetime

Periodontal maintenance

Combined with cleaning

Prosthodontic services

Sealant age

One per 60 months


R&C Percentile


One per 60 months

Up to age 19

Up to age 19

4 per year

1 in 5 years

Up to age 19

No limit



Up to age 14

Up to age 14

2 per year

1 in 10 years

Up to age 14

1 per 24 months


Not covered

Potential savings of 3.5 – 5%*

*Range indicates plan savings off of MetLife’s full block of self-funded/insured PPO plans based upon analysis of MetLife’s 2004 book of business.

Note: Options may be subject to state regulations.

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Other things to look for Plan

  • If the Current Contract Is “Open,” Is the Quote “Closed”?Estimated Price Impact = 1% to 3%

  • Does the Quote Include Asymptomatic or Naturally Functioning Tooth Limitations? If So, How Are They Applied?Estimated Price Impact = 2% to 3%

  • Are All Endo., Perio. and Oral Surgery Services in One Category (e.g., Type B) or Are They Split Among Categories (e.g., Type B & C)?Estimated Price Impact = 5% to 25% (8% if 100/80/50)

  • If the Current Plan Is R&C Based (out-of-network), Is the Quote R&C Based? Is R&C Calculated the Same Way?Estimated Price Impact = 0% to 20%

SOURCE: Estimates are based on MetLife data.

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What You See Plan

What You May Get

Type I –


– Oral Examination – Oral Examination (hard/soft 6 months?)

– Fluoride Treatment – Fluoride Treatment (consecutive months?)

– Prophylaxis (cleaning) – Prophylaxis (cleaning) (combined w/ Perio.?)

– Sealants – Sealants (per tooth; per lifetime?)

– X-Rays – X-Rays (bitewings only / consec. months?)

– Oral Surgery – MinorOral Surgery

– Fillings – Fillings (replacement limits?)

– Endodontics –X-Rays (all other / limits?)

– Periodontics – Endodontics (pulp caps)

– Periodontics (non-surgical / limits?)

– Prosthetics – Endodontics (root canal therapy)

(bridges, dentures) – Periodontics (combined surgical limits?)

– Crowns, Inlays, Onlays – Complex Oral Surgery (asymptomatic tooth exc.?) – Prosthetics (bridges, dentures)

(naturally functioning tooth exclusion?)

– Crowns, Inlays, Onlays (Implants / Alt. Benefit?)

Type II – Basic

Type III – Major

Closed or Open List?

Adding it all together…

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Multi-Option Strategies Plan

Promote high participation and maximize participation in each plan to avoid adverse selection

A recommended dual-option approach:

  • Cover the same services in both plans

  • Design differences including:

    • Both plans should be attractive to the entire population to help avoid adverse selection

    • Low plan should include greater cost sharing features

  • Lower plan must deliver significant value at an attractive price

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Voluntary Strategies Plan

Promote high overall participation by keeping rates attractive to most employees (high and lower utilizers)

A recommended approach:

  • Plan design:

    • Focus on preventive and diagnostic services

    • Primary allocation of services

    • Greater degree of cost sharing for major services

    • Two-year participant plan selection lock in/lock out

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Retiree Strategies Plan

Promote participation through one open enrollment opportunity, no late entrants

A recommended approach:

  • Plan structure

    • Offer coverage to individuals who have had coverage as an active employee

    • Pension deducted payments

  • Plan design

    • Focus on coverage designed to maintain oral health

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Types of Reimbursement Plan

  • PPO Fee

    • Discounts can vary widely, especially when multiple networks involved

    • Can be used as reimbursement both in and out of network

    • Discounts are sometimes applied to non-covered services, amounts above the maximum, etc.

  • R&C/UCR

    • The administrator’s determination of an out of network average/reimbursement.

  • Separate fee schedules for General Dentists and Specialists

    • Services performed by a specialist (i.e. Perio, Endo, Oral Surgery) at a rate of 70%

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R&C (Reasonable & Customary), UCR (Usual, Customary, & Reasonable)

  • For example, MetLife uses the lesser of three things:

    • The dentist’s Actual submitted charge

    • The dentist’s Usual charge

    • Customary Charge (geographic area)

  • Customary Charge based on a percentile (51st, 70th, 80th, 90th, 99th)

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Reasonable & Customary- Variances Reasonable)

  • One administrator’s 90th percentile may not necessarily equal another’s

    • Differences in definition of geography

      • 3-digit zipcode

      • Region

      • State

    • Use of only In Network Charges to determine percentile vs. All submitted charges

      • Using “In Network Only” leads to lower reimbursement out of network

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What Is the Goal of a Dental Network? Reasonable)

To be effective, a network needs to accomplish four essential things:

  • Lower benefit plan costs

  • Increase plan participant satisfaction

  • Promote a healthier, safer environment for patient care

  • Enhance dental practice efficiencies

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Retention: What is Turnover? Reasonable)

  • Two types of turnover

    • Voluntary

    • Involuntary

  • What is a reasonable amount of turnover? (5%, 2% is ideal)

    • Turnover rate for individual PPO dental offices was 9.0%*

      • PPO general dentists was 7.9%*

      • PPO specialists was 4.7%*

*NADP, 2004 Dental Benefits Report on Network Statistics, August 2004 (dentists or offices that left a network from 01/01/03 through 12/31/03

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Questions? Reasonable)