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Practice Administration

Third Party Payers: A General Overview

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As with any effort to overview something very complex, these general guidelines are intended to be exactly that--general.  The guidelines may not apply to your specific situation because your situation will be fact-dependent.  For members, the American Dental Association may be willing to evaluate a given third-party-payer's contract, analyzing its financial impact on your practice.  Go through your state dental organization to request this service from the ADA.  You are strongly encouraged to read all third-party contracts before signing them.  Most contracts allow the insurer to audit your charts for accuracy at any time.  

 

 

Indemnity or Direct Reimbursement Plans: 

 

% of Your Usual Fees Typically Paid by Third party and patient Combined/Treatment Commonly Covered: 

  • 100% or nearly 100%
  • Most treatment is covered up to specified yearly maximums which may range from $500-$2,500

 

If a contract dentist accepting or participating with this third party payer, you: 

  • Typically process/submit claims to the insurance company for the patient
  • Typically agree to “assignment of benefits” (to accept direct payment from insurance the insurance company for treatment provided

 

If not a contract dentist participating with this third party payer, you: 

  • Typically process/submit claims to the insurance company for the patient
  • Typically agree to “assignment of benefits” (to accept direct payment from insurance company or employer for treatment provided

 

 

Preferred/Participating Provider/Panel (commonly referred to as “PPO”): 

 

% of Your Usual Fees Typically Paid by Third party and patient Combined/Treatment Commonly Covered: 

  • 60 – 90%
  • Most preventive treatment covered with limited patient co-pays of approximately 20% or less of agreed upon fees; may have higher co-pays for operative (perhaps 20 - 30%); still higher patient co-pays of 50% for more extensive dental treatment such as crowns, bridges, endo, ortho--if covered at all).   Yearly maximum benefits may range from $500- $2,500. 

 

If a contract dentist accepting or participating with this third party payer, you: 

  • Agree to accept as payment in full the amount specified by contract.
  • Typically process/submit claims to the insurance company for the patient.
  • Almost always agree to "assignment of benefits" (to accept direct payment from insurance company for treatment provided).
  • Will likely see an increase in demand for services from patients with this type of insurance.

 

If not a contract dentist participating with this third party payer, you: 

  • May still provide dental care for patients with this type of insurance.
  • May or may not process/submit claims to the insurance company for the patient, but patients don't like submitting claims!
  • May or may not agree to "assignment of benefits" (to accept direct payment from insurance company for treatment provided).  If not accepting assignment, the patient pays you the total fee without any adjustment and the insurance company then pays the patient for the covered portion of treatment.   If accepting assignment, the insurance company pays you for the amount they cover and the patient owes the balance without any adjustment in fees.
  • Will likely see a decrease in demand for services from patients with this type of insurance.

 

 

Capitation/Dental Health Maintenance Organization (commonly referred to as “DHMO”): 

 

% of Your Usual Fees Typically Paid by Third party and patient Combined/Treatment Commonly Covered: 

  • 0 - 80% plus a monthly $5-$7 payment for each patient whether or not treatment provided
  • Most preventive treatment covered with limited or no patient co-pays--for example, an exam could be for no fee; may have co-pays for operative (perhaps 20 - 30%); still higher patient co-pays of 50% for more extensive dental treatment such as crowns, bridges, endo, ortho--if covered at all.   Yearly maximum benefits may range from $500- $2,500

 

If a contract dentist accepting or participating with this third party payer, you: 

  • Agree to accept as payment in full the amount specified by contract.
  • Typically payment is made by the patient for the contracted fee amount.
  • Will likely see an increase in demand for services from patients with this type of insurance.

 

If not a contract dentist participating with this third party payer, you: 

  • Would not provide care for patients with this type of insurance.

 

 

Medicade/Title 19 

 

% of Your Usual Fees Typically Paid by Third party and patient Combined/Treatment Commonly Covered: 

  • 40-60% or less 
  • States vary but usually cover preventive and operative treatment for children; if coverage other than emergencies is provided for adults it is often restricted/limited by procedure or maximums in specified time periods (for example, $1,000 per year) 

 

If a contract dentist accepting or participating with this third party payer, you: 

  • Agree to accept as payment in full the amount specified by Medicaid.
  • Process/submit claims to Medicaid on behalf of the patient
  • Agree to "assignment of benefits" (to accept direct payment from Medicaid for treatment provided).
  • Will likely see an increase in demand for services from patients with this type of insurance.

 

If not a contract dentist participating with this third party payer, you: 

  • Would not provide care for patients with this type of coverage (unless essentially given for free or with significant discount determined by you).
The information in this blog should help new dentists and dental students to gain a better understanding of third party insurance payer systems. Hopefully this breakdown will be helpful to those of you that start your own practice after completing dental school, and can help to clear up what can be a very confusing topic of medical/dental insurance that is not generally covered in the dental school curriculum.