Amid Mounting Dictates from Third Party Payers, Dentists Call for Revolution

August 8, 2016
Ed Rabinowitz

As payers increasingly impose pricing mandates on dentists, industry groups say an overhaul of the current system is the only solution.

Five years ago, Gordon Christensen, DDS, MSD, PhD, founder and CEO of Practical Clinical Courses and senior consultant for Clinicians Report, conducted a major survey on the state of the dental profession in the US. A total of 1,500 dentists responded to the 24-question survey, and their number-one-ranked concern was third-parties dictating treatment plans and setting fees.

More specifically, dentists were upset about third-party payers setting fees even for services that weren’t covered under their dental plans.

Not only does the issue remain today, Christensen believes it’s worse.

“It’s worse because there are more dictations now, and there is a reduction of benefits coming for many of the procedures,” Christensen says.

Since Christensen’s survey, 38 states have passed legislation—the non-covered services laws—barring third-party companies from this practice. That means the problem still exists.

“Any time we reduce our fee for whatever reason, it can certainly affect the practice,” explains Ron Riggins, chair of the ADA Council on Dental Benefit Programs. “And if you perform a service for your normal fee and it comes back that you won’t receive that same fee, you might not have your business model in place to be able to handle that.”

Feeling the Impact

Christensen acknowledges that third-party benefit plans have done some good. For example, they have paid for some individuals to receive services they might not have been able to obtain. But without a doubt, he adds, they have reduced dentists’ level of income.

“People don’t realize that if a dentist takes in $100 for a procedure, $71 of that goes to overhead, immediately,” Christensen explains. “So he has a dribble left, and the government gets almost 40% of that.” Third-party companies that further reduce fees worsen the scenario. “We’re going to see third party continue to be the most grievous challenge the dentist faces every day.”

Riggins illustrates the problem using occlusal guards and night guards, which is something dentists often provide but most dental benefit plans don’t cover. The dentist may charge $1,000 for the night guard, but the third-party payer indicates that the service is not covered, so they will only allow the dentist to charge $350.

“That’s an example of what dentists are upset about,” he says. “Third-party benefit companies are saying we’re not covering it. But if you provide the service, you have to provide it at this rate. That has made dentists very angry.”

Financial and Clinical Impact

The financial impact on dentists of third-party dictation of treatment plans is clear. But there is a clinical impact as well. As Christensen explains, dental supplies and equipment average roughly 6% of a dentist’s gross revenue.

“You can’t change that,” he says. “Salaries eat upwards of 20% of revenue, and you can’t change that.”

What that means, he says, is that dentists find themselves having to work faster.

“And let’s face it, you go fast, and sometimes you have quality and sometimes you don’t,” Christensen says. “So [third-party dictation] definitely has affected quality.”

Riggins says it’s incumbent on dentists and their state dental association to bring these situations to the attention of their state legislators. States that still have not passed non-covered services laws include: Utah, Colorado, Michigan, Indiana, Ohio, West Virginia, South Carolina, New York, Massachusetts, Vermont, New Hampshire, Maine, and Hawaii.

Christensen advocates for stronger measures.

Time for a Revolution

Christensen says that if he were 40 years old, he would be “a raving maniac.” But that’s not the case. Still, he believes what is needed is “an absolute, complete, utter overhaul of the whole system.” Will that ever occur? He acknowledges the issue is a controversial one.

“If you look at my state (Utah), one major hospital has bought out almost all the hospitals,” Christensen explains. “They set the fees, and they set the salaries for the physicians. If this were the legal profession they would have already had a revolution 30 years ago. But the medical and dental, they’re so darned busy and concerned helping patients, they go home and they’re tired. They’re not dealing with a lot of politics.”

The revolution, Christensen says, needs to start with a realistic conversation. For example, a crown costs $1,000. However, many insurance companies have pegged the fee at between $500 and $600. The overhead, he points out, is such that “the dentist is barely making cab driver wages” to do the crown.

“Fees should be based on time involvement and difficulty,” he says. “That’s pretty easy to identify. If a procedure on average takes 20 minutes, that’s a finite number in dollars. And how hard is it? But in no way to we even approach [that line of thinking] in dentistry.”