Delta plan to submit new fee methodology

Boston鈥擬assachusetts dentists may see changes in reimbursements in response to an April 14 order from the Massachusetts Division of Insurance.

“Unreasonable” is how the division of insurance’s order describes part of the fee methodology Delta Dental Plan of Massachusetts is using to reimburse dentists who participate in its Premier network. Some 95 percent of Massachusetts’ dentists participate in the plan. The order, which followed two days of hearings in December 2008, requires Delta to submit a new fee methodology to the division of insurance and a plan for implementing it within 90 days of the decision.

“We believe the state has been fair in this determination,” said Dr. Milton Glicksman, president of the Massachusetts Dental Society. “Naturally we are very pleased by the decision.”

The Massachusetts Division of Insurance held a public hearing concerning the fees Dental Services of Massachusetts d/b/a Delta Dental Plan of Massachusetts (“Delta Dental”), a nonprofit dental service corporation organized under state law, pays participating dentists for dental services provided to their subscribers, and the method Delta Dental uses to determine such fees. The purpose of the public hearing, according to the published notice, was to afford all interested persons an opportunity to provide oral and/or written comment or testimony as to whether Delta Dental’s fee methodology and the fees it pays to participating dentists comply with the standards set forth in state law.

The division convened the hearing after receiving correspondence about Delta Dental’s fees from the Massachusetts Dental Society, Delta Dental’s written response to these concerns and further correspondence from each.

“Many third-party carriers enjoy statutory and regulatory privileges that demand scrutiny within the changing practice environment,” said Dr. Robert Faiella, ADA 1st District Trustee. “In this decision, the division used its regulatory power for the benefit of our patients as well as the providers of care. By rejecting Delta’s reimbursement, the order opened the door to more competition among carriers who provide dental benefits.”

In the order, the division of insurance found unreasonable portions of Delta’s fee methodology applying an across-the-board 5 percent discount on fees and the insurer’s use of the Consumer Price Index to cap reimbursements for Delta’s Premier participating dentists.

Relying in part on a 2006 ADA survey showing a drop in dentists’ bad debt levels, the division of insurance held that the five percent discount now exceeded “a reasonable reflection of the comparative ease and certainty of payment by Delta in modern circumstances.”

Ease and certainty of payment was the basis for the discount, which originated by reference to a survey conducted by the MDS in the mid-1960s. That study found that Massachusetts’ dentists’ average uncollectible accounts receivable over a three-month period was four percent.

MDS at the April hearing testified that for dentists to take a 5 percent discount in exchange for ease and certainty of payment is no longer reasonable in a world in which dentists increasingly accept payments from patients by credit card.

Dr. Timothy Snail, an economist who testified on behalf of MDS, said that dental practice bad debt levels have dropped more than seven fold, to 0.5 percent. Dr. Snail also said that at present, on a national basis, payment by credit card generally involves a credit card fee of 1.5 to 3 percent.

The division also held that Delta’s use of the CPI to cap reimbursement caused a “drastic disconnect” with actual fees and is “inherently unreasonable.” Among problems with Delta’s CPI adjustment described in the order was the inability to demonstrate that the CPI used reflects a Massachusetts dentist’s cost of doing business.

The division also rejected Delta’s attempts to show that its fee methodology is reasonable by comparing the amount of its reimbursement against that of other dental plans because Delta’s economist omitted several of Delta’s main competitors from his analysis.

MDS leaders say that the decision may help level the competitive field for insurance companies in Massachusetts. They predict that Delta may absorb the additional costs to make up for the reduction or elimination of the 5 percent discount, allowing other insurance companies to market more competitively. That could give employers an opportunity to shop around for a plan that might be less expensive or better for their employees.

A statement issued to ADA News by Delta Dental of Massachusetts said, in part, that the insurer is in the process of revising its reimbursement methodology for dentists participating in its Premier network.

“We are exploring alternative strategies for provider compensation that will balance the needs of our participating dentists, customers and members. We expect this will take several months to complete. As the state’s leading insurer, Delta Dental of Massachusetts is committed to developing a reimbursement methodology that ensures access to dental care at affordable costs.”

Dr. Robert Boose, executive director of the Massachusetts Dental Society, says MDS is looking forward to the opportunity to comment on Delta’s proposal.

“The eventual outcome could signal a realignment of various sorts for dentists,” said Dr. Boose. “Many states will be closely following this decision.”聽