Finance in Dental Care

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CONTENTS

INTRODUCTION

Health care services traditionally have been provided on a fee for service basis whereby the patients receive specific services and pay the provider for them directly. As the costs of health care continue to rise, methods will be sought to ease costs either by legislation or by the development of a variety of funding approaches.

Health for all by the year 2000 A.D is the goal of WHO. However in a developing country like India, the oral health status of the population still remains very poor. As the costs of dental care continuous to rise, the majority of the people cannot afford dental treatment, especially when it is being provided on a fee for service basis.

MECHANISM OF PAYMENT FOR DENTAL CARE

The mechanisms by which dental practitioners receive payment for their services can be grouped into:-

1.     Private fee for service.

2.      Post payment plans.

3.     Private third party prepayment plans

·        Commercial insurance companies

·         Non profit health service corporations

E.g.: Delta dental plans, blue cross /blue shield

·         Prepaid group practice

·         Capitation plans

4.      Salary

5.     Public programs.

PRIVATE FEE FOR SERVICE

Private fee for service, the two party arrangements, is the traditional form of reimbursement for dental services. Dentists overwhelming prefer to practice under this arrangement and the ADA defends fee for service as the most efficient way of providing dental care. Fee for service care is an integral part of private practice as a delivery method.

Advantages:-

-         Culturally acceptable

-         This system is flexible. Fees can be changed in accordance with market conditions and the dentist is also able to practice what is called ‘’ price discrimination’                                             

-         It is administratively simple.

-          It is the only system under which some form of dental care likely will ever be provided.

Disadvantages:-

However, despite the flexibility and price discrimination, there are still some potential patients who cannot afford dental care. These persons would fee for service were the only financing mechanism for dental care.

POST PAYMENT PLANS

Pos t payment or budget payment plans are mechanisms for the individual purchase of service. While dentists have frequency arranged to allow payment for dental care be made at intervals over a period of time this first step to offer this service through organised dental society plan were taken in the late 1930’s by local dental society in Pennsylvania and Michigan.

Under the budget payment plan, the patient borrows money from a bank or some finance company to pay the dentists fee. After the application is approved by the lending institute the dentist is paid the entire fee. The patient then repays the loan to the bank in budgeted amounts.

At the time that they had been developed it was hoped that this would benefit large segments of population, but they have do so as it was used primarily by the income group. The problems were associated with defaulted loans and low income patients would also have more difficulty being accepted as credit worthy by lending institutions.

 PRIVATE THIRD PARTY PREPAYMENT PLANS

It is defined as ‘’payment for services by some agency rather than directly by the beneficiary of those services’’. The dentist and the patient are the first and second parties and the administrator of finances is the third party, defined as the party to a dental prepayment contract that may collect premiums, assume financial risks, pay claims and provide administrative services. The third party is also known as the carrier, insurer, underwriter or administrative agent. Usually the term ‘’third party’’ refers to a private carrier such as an insurance company.

The economic consequences of this trend are just beginning to be felt in dentistry, but have been at work in medical care for a long time. It has been practised in US, Middle East countries, etc.

Earlier dental care was considered uninsurable by carriers. This reasoning was based on the assumption that the very nature of dental need violated the basic principles of the insurance. To be insurable, a risk must

1.      Be precisely definable

2.      Be of sufficient magnitude that if it occurs, it constitutes a major loss.

3.      Be infrequent.

4.      Be of unwanted nature

5.     Be beyond the control of individuals

6.      Not constitute a ‘’moral hazard’’.

Since illness is not predictable, insurance carriers have found ways to get around these problems, by offering different types of payments like

a)     Deductible

b)    Co insurance

c)      Group insurance

a)     Deductible: -

It is a stipulated flat sum that the patient must pay toward the cost of treatment before benefits of the program go into effect. It is sometimes called a ‘’ front end payment’’.

b)   Co insurance:-

It is also called as co payment. It means that the patient pays a percentage of the total cost of treatment.

Dunning defined co insurance as an arrangement under which a carrier and the beneficiary are each liable for a share of the cost of the dental services provided.

 Insurance carriers limit the range of health care services covered. This is termed, ‘’limitation of benefits’’. Co insurance helps to keep premiums down.

c. Group insurance:-

 Health insurance is a first offered only to group. This is because illness experience is reasonably predictable in a group. The probability of adverse selection was also reduced by the use of waiting periods after enrolment before any benefits become available. The waiting period ensured that persons with existing disease were not simply going to use the plan to have that disease treated and then drop out.

REIMBURSEMENT OF DENTISTS IN PREPAYMENT PLANS:

The ADA has consistently supported the concept of usual, customary and reasonably (UCR) fee as the preferred method for imbursement for dentist in prepayment plans. Apart from UCR fees, the only other form of payment plans is table allowance.

Prepayment plans can be subdivided into 4 types.

a)     Commercial insurance plans

b)    Delta dental plans

c)     Prepaid group practice

d)    Capitation plans

3 A) Commercial insurance plans

Characteristics:-

·        They can be more selective about the group to which it chooses to offer dental insurance.

·         They claim no obligation toward the dental health of the community.

·        They sometimes arrange an indemnity program that provides specific for cash payment reimbursement for specified covered services.

·         Commercial insurance companies also organize their levels of reimbursement differently.

·         Commercial companies also do not conduct fee audits and post treatment dental examinations.

  Commercial insurance companies can compete successfully because their expertise in promotion and marketing allows them to present attractive total health package plans to potential purchasers. Their large financial reserves also allows them, if necessary, to offer a reduced dental premium to a particular group as a ‘’ loss – leader’’ in order to get a toe hold on the market. However, since they operate for profit, they charge higher premiums.

3B) DELTA DENTAL PLANS:-

Delta dental plan is synonymous with dental service corporation. A dental service corporation is legally constituted non- profit organisation incorporated on a state by state basis and sponsored by a constituent dental society to negotiate an administrator contract for dental care. They are usually subjected to the insurance law of the state in which they are constituted.

The National Association of Dental Service Plans (NADSP) was formed in June 1966 with the help from ADA.  The NADSP changed its name to Delta Dental Plans Association in April 1969.

 The underlying philosophy of the Delta Dental Plans is that the dental practitioners can adapt their traditional practice to meet the demand for group purchase of dental care. The majority of the board of directors of most Delta Plans are dentist. Other board members represent the worlds of finance, insurance and consumer groups.

The Delta Plans have specific approaches to insure the quality of care provided and to keep a program’s cost within its limits. Quality of care is monitored to insure that

·        The care claimed and paid for has in fact been provided.

·        It is of ‘’acceptable ‘’ quality.

REIMBURSEMENT OF DENTISTS IN DELTA PLANS

Delta dental plans almost exclusively use the UCR concept. The way in which a dentist is participating or none participating in the plan. A participating in the plan. A participating dentist is defined as any duty licensed dentist with whom a Delta plan has a contractual agreement to render care to covered subscribes. Non participating dentist can also treat patients covered under Delta Dental Plan. They are paid at a considerably lower percentile than 90^th, often at the median or 50^th percentile. They however do not need to profile their fees and are not subject to fee audits.

In comparison to the giants of the commercial insurance world, the Delta Plans are small. Yet they have managed to grow to a healthy state and to compete successfully in a highly competitive market place.

              HEALTH SERVICE CORPORATIONS

The health service corporations , of which blue cross / blue shield is the most important, have for years offered limited dental coverage as a part of medical policies. Dental coverage was usually limited to servicers provided in a hospital.  Health service corporations showed no enthusiasm for going any further into dental prepayment on the grounds that it was a poor insurance risk, but their attitude changed once dental prepayment was shown too feasible. Blue cross/ blue shield dental plans have adopted many of the cost control features pioneered by delta plans.

3 C) Prepaid group practice

It is the term given to a group practice that provides dental services on a prepaid basis. Such groups are now generally regarded as open panels, though this has not always been so.

ADA (1969) has defined grouped practice as ‘’group practice is that type of dental practice in which dentists, sometimes in association with members of other  health professions agree formally themselves on certain central arrangement designed to provide efficient dental health service’’. According to the U.S Public Health Service (1971) , ‘’A group dental practice is defined as a practice formally organised to provide dental  care through the services of three or more dentists using office space, equipment and/or personnel jointly’’.

·        General practice groups composed entirely of general practitioners.

·         Single speciality groups all members of the group are of the same speciality.

·        Multi speciality groups certain practitioners in two or more speciality fields of practice.

The advantages of for the dentist who practices in group are;

1.     It provides better ways of organizing one’s life.

2.     There is less disruption in the practice caused by illness to a dentist.

3.     Quality of care is said to be improved because of the built in peer review.

4.     Financial fringe benefits such as sick leave and pension plans can be built into a group organisation more readily, thus easing the day to day economic concerns of dental practice.

Most group practises treat patients on the traditional fee for service basis and only a few administer prepaid programs. Some of these group practises operate as closed panels. Closed panel practise under a prepayment plan is defined by the ADA as existing if patients eligible for dental services in a public or private program can receive these services only at specified facilities from a limited number of dentists.

It has been charged that closed panel clinics are unethical and that they deliver care of inadequate quality. However , other are of the opinion on that dentistry opposition to closed panels is because dentists are more concerned about the possible loss of their patients to the closed panel.

A legitimate concern is who controls a closed panel practise. If a union sets up a dental care facility, lay persons may administer it to the extent that the lay administrators dictate some areas of clinical management. In such facility dentists could be instructed to extract the teeth and provide dentures to adult patients, rather than to exercise their clinical judgement.

Three features according to the definition of the U.S Public Health Service characterise open panel practise, considered acceptable by the dental profession,

·        Any licensed dentist may participate.

·        The beneficiary has choice from among all licensed dentists

·        The dentist may accept or refuse any beneficiary.

3 D) CAPITATION PLANS

The basis of capitation is that the contrasting provides whether a Health Maintenance Organisation (HMO), group practise.

The Independent Practise Association (IPA) or individual dentist receives an established, negotiated sum on monthly or yearly basis for each eligible patient. The money is paid regardless of whether the patient utilizes care or not. In return, the patient is entitled to receive a prescribed set of services over a specified period.

Apart from the development of HMO’s, other third party carriers and even private entrepreneurs are becoming involved in the marketing of capitation plans. Some have ‘open enrolment’ meaning that plans are not purchased by specified groups but that an individual can try in. Many of these offer only limited services (such as examination, prophylaxis, radiographs and treatment plan) and may be more saleable to participating dentists because the risk assumed is low. In areas where there is a real or perceived oversupply of dentists, these capitation plans could be attractive to both purchaser and provider.

4) SALARY

Dentists in same group practised those in the armed forces and those employed by public agencies are salaried.

Advantages:-                                  

1.      It allows a dentist to be largely free of the business concerns of running a practise, thereby allowing the dentist to concentrate on clinical matters.

2.     Fringe benefits are also often attractive.

Disadvantages:-

There could be a lack of financial incentive that some dentists, need to be highly productive.

5) PUBLIC PROGRAMS

Private practise is usually not able to meet the dental demands of all people. There are therefore a number of public programs aimed at meeting the needs of specific groups of recipients in the diverse society

The public programs are sponsored by the government and also include community health centres.

                                   

A)  MEDICARE

B)   MEDICAID

C)   THE Veterans Administration (VA) program.

D)  National health insurance

·       Medicare:-

Title xviii of the social security amendments of 1965 is the program known as ‘’Medicare’’. This program removed all financial barriers for hospital and physician services for all persons aged 65 and over, regardless of their financial means. By the 1970s, Medicare has 2 parts

Part A, Hospital Insurance

Part B, supplemental medical Insurance.

Both parts contain a highly complex series of service benefits available and both parts also require some payment by the patients.

Medicare was brought into being because the voluntary health insurance system was unable to provide adequately for persons over age 65. The medical assistance to the aged (MAA) program of 1966 attempted to low income of persons aged 65 and older, but was too cautious to be successful.

The dental segment of Medicare is limited to those services requiring hospitalization for treatment, usually surgical treatment, usually surgical treatment for fractures and cancer and hence constitutes a negligible proportion of the program.

B) MEDICAID:-

It is the name given to title xix of the social security amendments of 1965. The original intent of the program was to provide funds to meet the health care needs of all indigent and medically indigent persons.

·        Medicaid is a joint federal state program. In order to qualify for the federal governments share of Medicaid financing , every state Medicaid program must cover at least theses basic services ,

·        In patient hospital care

·         Outpatient hospital care

·        Laboratory and x-ray services

·        Skilled nursing facility services

·        Home health services for individuals aged 21 years and older.

·        Early and periodic screening ,diagnosis and treatment (EPDST) program for individuals under 21 years

·        Family planning services

·        Physician services

Dental care is not a mandatory service, except for persons under 21(part of the EPSDT program). The ADA supported the EPDST program, enacted into law in 1968, because for the first time a federal program mandated dental care for indigent children. EPSDT therefore had the potential for bringing into the dental care system, millions of indigent children and youth.

Medicaid is an extremely complex program as it is complicated and confusing to many people. Although the program has reached a large number of people, inevitably there are loopholes. Certain groups such as widows under 65 and families without children have been identified as not being eligible for benefits of Medicaid. Therefore many persons are still unable to receive the dental care they require.

D  NATIONAL HEALTH INSURANCE:-

The national health insurance was introduced by Bismarck in Germany in the 1880’s and in Britain by Lloyd George in 1910. While humanitarianism was a factor in their development, a more powerful stimulus was probably the awareness that a healthy and secure society led to political stability and greater economical and industrial strength.

The NHI is primarily a financing mechanism by which health care services are paid for from a publicly organized fund. Opponents of NHI said that the program would be inflationary for care. Supporters of NHI say that while the global costs of health care services would be likely to increase, the load would be more equitable distributed and the end result would more likely be a healthier, more secure and more productive society.

MECHANISM FOLLOWED IN INDIA:-

In India, most of the dental treatment is provided on a fee for service basis. The private third party payment plan is limited only to those dental services requiring hospitalization. A very few hospitals follow prepayment plans in India like Apollo hospital, Chennai, etc. Therefore other methods of payment have to be made available in a developing country like India. For the people, so that cost of dental treatment will not be a barrier for effective dental care.

OTHER PROGRAMS OF PUBLIC FINANCING FOR DENTAL CARE:-

The federal government also provides financing for dental treatment of children in head start, the preschool child development program and of enrolees in the job corps, the training program for young adults from disadvantaged backgrounds. Both of these programs were invited in the mid 1960’s and here private dental practitioners provide care to enrolees and are paid by local administrators of the programs.  Rehabilitative care for children born with cleft lips and palates have long been financed cooperatively by state fund and grants in aid from the federal government.

ISSUES IMAPACTING DENTISTRY DUE TO THIRD PARTY PREPAYMENT PLANS:-

One of the main issues impacting dentistry due to third party prepayment plane is inadequate reimbursement, quality assurance and market economics. In order to tackle these issues, a suitable approach must be taken by carrier to promote third party prevalence.

SCOPE FOR MICRO FINANCE AND INSURANCE IN UNDERDEVELOPED AND DEVELOPING COUNTRIES:-

This is an important form of finance mechanism practising in some countries like Uganda, etc. This helps to improve the well being and performances of clients. Their vision is to be the leading health management and insurance organisation providing affordable access to quality health care for low income earners. They work by making contract with hospital and clinics.

Advantages:-                                                 

-         Provides better opportunity to negotiate treatment prices down.

Summary:-

Private fee for service dentistry is likely to remain the predominant method financing dental care in the foreseeable future. Other methods of financing care received through the private practitioner, however, are likely to become more common.

The traditional public health approach may need to be modified to use a mixture of public and private funds if the dental needs of all people are to be met. Dental personnel can be certain that the financing of dental care is a dynamic area with further rapid evolution still in store.

REFERENCES:-

1.     Essentials Of Preventive And Community Dentistry by Soben Peter

2.     Text Book Of Preventive And Community Dentistry by Joseph John