Providers of Dental Benefits | Dental Plan Design

Providers of dental benefits generally can be separated into three categories: insurance companies, Blue Cross and Blue Shield organizations, and others, including state dental association plans (e.g., Delta plans); self-insured, self-administered plans; and group practice or HMO-type plans. Insurance companies and Blue Cross/Blue Shield plans cover the largest share of the population. However, enrollment in self-administered, self-insured plans; plans employing third-party administrators; dental association plans; and HMOs is in an upsurge.

The types of dental benefit plans resemble today's medical plans. There are three basic design structures: the fee-for-service indemnity or reimbursement approach, the preferred provider (PPO) approach, and the dental health maintenance organization.

Insurance company-administered dental benefits and most self-insured, self-administered plan benefits are provided on either an indemnity or preferred provider basis. Under the indemnity approach, expenses incurred by eligible individuals are submitted to the administrator, typically an insurer, for payment. If the expense is covered, the appropriate payment is calculated according to the provisions of the plan. The indemnity plan payment generally is made directly to the covered employee, unless assigned by the employee to the treating dentist.

Preferred provider benefits are payable directly to the treating dentist, generally according to a contract, which fixes the reimbursement level between the dentist and the plan. In most instances, this payment actually may be lower than what would be charged to a direct-pay or indemnity patient.

The dental benefits of both dental service corporations and Blue Cross/Blue Shield plans are generally provided on a preferred provider basis. The major differences between indemnity and preferred provider benefits relate to the roles of the provider and the covered individual. Under either approach, the plan sponsor normally has substantial latitude in determining who and what is to be covered and at what level.

Under the group practice or HMO-type arrangement, a prescribed range of dental services is provided to eligible participants, often in return for a prepaid, fixed, and uniform payment. Services are provided by dentists practicing in group practice clinics or by those in individual practice but affiliated for purposes of providing plan benefits to eligible participants. Some individuals eligible under these arrangements are covered through collectively bargained self-insurance benefit trusts. In these instances, trust fund payments are used either to reimburse dentists operating in group practice clinics or to pay the prescribed fixed per capita fee. Group practice HMO-type arrangements, which often have cost, quality assurance, and administrative advantages but more limited provider selection, generally offer little latitude in plan design. As a result, the balance of this chapter, since it is largely devoted to the issue of plan design, may have limited application to these types of arrangements.