There is no question that dental insurance has had a positive influence in availing the public to dental healthcare services. Unfortunately for dental consumers, the insurance industry’s primary responsibility is profit generation for shareholders. This is in direct contrast to a doctor’s primary obligation of placing patient interests to the fore. Like any capitalist business, the insurance industry will compete to serve the needs of their customers, who are generally not patients who require healthcare or doctors who provide healthcare services. Patients and doctors are ancillary parties in the process of serving entities that purchase dental care plans. Such entities may be employers, workplace unions, or the government (in the case of Medicare and Medicaid).
The Second World War brought about domestic freezes on wages and consumer prices. Employers wishing to increase or retain their labor forces were prohibited from raising salaries. In response, the US Congress passed the McCarran-Fergusson Act in 1945. Employers could then offer untaxed benefit packages to their employees in lieu of wages. This was the origin of dental insurance in the United States. This federal statute also exempted the insurance industry from antitrust laws that nearly every other US industry must lawfully comply with. For example, under these laws, a group of dentists would be prohibited from sharing the fees they establish for services. The US Federal Trade Commission (FTC) could invoke severe civil and criminal fines and penalties for such collusion. By contrast, the FTC cannot prosecute the insurance industry for similar actions of collusion, as they are exempt. That means insurance companies have great leverage and advantage in the marketplace because they are free to lawfully share their business models, fee schedules, etc, with one another.
It’s been several decades since the end of World War II and the domestic workplace paradigms of 1945. Yet, the McCarran-Fergusson Act continues as current standing law, largely because of the powerful lobbyist efforts of the insurance industry. The interests of the American people would be well-served by the revocation of this antiquated statute.
Power and Control
Just as insurance industry lobbyist money buys influence at the federal congressional level, influence is also purchased on the state level. Politicians, like the armies of ancient Rome, are often loyal to who pays them. Oversight of insurance company activities at the state level is usually provided by state insurance regulatory commissions. These state agencies mandate activities, such as the amount of cash reserve an insurance company must hold or the state tax revenues to be paid on the premium dollars collected. They also mediate the disputes of patients and doctors who contend that carriers reneged on authorized payments, per their contracts.
Unfortunately for the public welfare, state insurance commissions are frequently filled by members whose primary interest is serving the insurance industry. These posts are staffed by individuals appointed by a governor who, again, may be overly influenced by lobbyist funding. Staffing may also be intentionally under-filled to render the agency ineffective. When a specific business group assumes control over a governmental regulatory agency, it is called “agency capture” or “regulatory capture.” Agency capture is not unique to the insurance industry and its related regulators. We’ve seen both Big Pharma unduly influence the US Food and Drug Administration (FDA) and corporate dentistry influence appointments to state dental boards.
Patient Coverage: Fact or Fiction?
Thirty years ago, the average annual maximum for benefit payout for dental insurance was $1,000. Today, that figure is largely the same amount. Even if that figure is in some cases elevated to $1,500, it still hasn’t kept pace with inflation. Exacerbating limited sums for maximal yearly payouts is the specific “product” that dental insurance assumes. Indemnity insurance, which was formerly the mainstay of dental coverage, has all but disappeared. Today, most plans are based on reduced, set fee schedules within preferred provider organizations (PPOs). We’ve also seen the rise of dental health maintenance organizations (DHMOs), in which providers are paid a small monthly sum to provide an extensive amount of care. DHMOs disincentivize patient care, probably more than any other dental insurance product.
A very new product to hit the scene is exclusive provider organizations (EPOs). This is somewhat similar to a PPO, but the insurance carrier is free to eliminate qualified healthcare providers from plan participation. Provider exclusion from an EPO is not based on a failure to meet credentialing or other professional standards; reasons for provider exclusion are proprietary business secrets and not disclosed. One can only assume the insurance company desires the lowest payouts possible, even if that means supervised neglect of patients.
The Affordable Care Act (ACA) and associated insurance exchanges have expanded offerings to the public. Unfortunately, many only offer the illusion of dental coverage. Pediatric dental care is mandated under ACA plans. However, under many plans, a required deductible payment level must be first reached (often $4,000 to $6,000) prior to eligible payouts for dental coverage. In addition, single adults and couples have purchased dental plans under the ACA with false assumptions of dental coverage that would be strictly limited to children.
Discount Dental Plans
Discount dental plans are not insurance plans. They require no financial reserves and are not regulated by state insurance commissions. There are almost no fiscal outlays by administrators. There is generally no oversight cost involved with monitoring of provider services—because there is no oversight. Initially, these plans were established by companies, which sold the public cards, which purportedly offered patients discounts for dental offices willing to accept the arrangement. Small dental practices, corporate chains, and franchise operations later established their own version of discount dental plans, which they also sold to the public. The insurance industry was unwilling to pass on an opportunity to profit from sales of a simulated, unregulated insurance product, which had minimal administrative cost, and also got in on the gravy train. Thus, a variety of discount dental plans are sold to directly to consumers from bonafide insurance companies.
The marketing presentation of discount insurance plans closely resembles that of duly registered insurance plans. Purchasers of these plans are not sophisticated directors of human resource (HR) departments of large corporate employers, or even federal, state, or local governments. Buyers of these plans are often persons of limited resources and education whose employers don’t offer dental coverage. There is too frequently a great discrepancy in understanding and access of information between buyers and sellers of these plans. The problematic nature of discount dental plans has resulted in their being declared unlawful in a number of states. Other states recognize discount dental plans and register them, but they aren’t regulated as insurance. Still other states have wide open, hands-off regulatory policies, in which consumers survive by their own wits and swim with the sharks.
Solutions
The insurance industry should be held accountable for its actions. A repeal of the antiquated McCarran-Ferguson Act must occur, and insurance companies must be held to antitrust laws the same as any other firm operating in America. Special treatment for those with big lobbyist money needs to end. The insurance industry maintains concern for those parties that directly purchase their insurance products. This too often excludes the interests of patients and doctors. Patients and doctors need to flood the HR departments of their employers with justifiable complaints, including employers in both the private and public sectors. Complaints filed may also include state insurance commissions, assuming they operate aboveboard and in the public interest. Complaints made directly to insurance companies often fall on deaf ears. They know exactly where their money comes from.
Discount dental plans should have close regulatory oversight, inclusive of how these products are marketed. If that process isn’t feasible for a state, then these plans should be outlawed. The public already faces enough confusion, frustration, and misrepresentation.
Insurance company documents, whether they be policies, explanation of benefit forms, or contracts with providers, should not be written in complex legalese. Verbiage needs to be simplified so even non-attorney readers can understand the content. As doctors, we routinely employ written and verbal communication in the patient informed consent process so that patients understand complex procedures and alternatives inclusive of the risks and benefits of treatment. We do this for persons of limited education and those who may have minimal proficiency in the English language. Insurance companies need to provide the same standard of communication and be held to those standards by law.
In a few progressive states, dental claims reviews are considered the practice of dentistry under state statutes. Claims reviewers must be licensed dentists, whose services are retained by the insurance companies. As such, these individuals are subject to potential peer review complaints, dental board complaints, and civil legal filings in state district courts. A valid clinical service, which is a covered benefit under a patient’s insurance plan, should not be denied arbitrarily. If an insurance company’s review process is unable to render a mutually agreeable payment, individual licensed dentists should be held to task for an inappropriate decision.
Provider plan contracts can be highly complex. By what process can a doctor/provider discontinue participation in an insurance plan? Under what circumstances may an insurance company audit a doctor/provider? What’s involved in a claims review process and how may it be appealed? How can an insurance carrier downcode certain dental services, which may result in reduced payments to doctors? These and a myriad of other questions may arise, which the legalese in a provider contract can make very confusing.
The ADA maintains a service for member dentists called The ADA Contract Analysis Service, which is found under the “Member Center” tab on its website, ada.org. While this service may not constitute formal legal advice, it’s a wonderful starting point for understanding insurance company contracts.
Dr. Davis maintains a general dental practice in Santa Fe, NM. He chairs his district dental society’s peer review committee and provides expert dental services for the legal community. He may be contacted via email at mwdavisdds@comcast.net or via the website smilesofsantafe.com.
Disclosure: Dr. Davis reports no disclosures.
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