Three Things Every Office Manager Should Know About Dental Insurance

1 “Self-Funded Groups”

Early in my career, I remember hearing dental consultants preach about delay tactics used by insurance companies to keep money drawing interest in the bank for as long as possible. Perhaps you’ve heard that sermon. This seemed reasonable to me and I took it as gospel until I truly saw the light.

My first revelation was when I learned that most large corporations offering dental benefits to their employees are “self-funded.” What does that mean? Here’s an example. Widget World is a large employer with self-funded benefits and pays an insurance company a fee to administer its dental benefits plan. In other words, when the insurance company pays a claim for an employee of Widget World, the insurance company is spending Widget World’s money. In such an arrangement, Widget World assumes all financial risk associated with claims and, in exchange for processing the claims, verifying eligibility, etc., the insurance company is compensated a flat rate regardless of the claim payment amount.

If the insurance company is paid the same regardless of the claim payment amount, how could it make more money by delaying payment? It can’t. Understanding this relationship now, I see that the way I once communicated with patients regarding their insurance was influenced by outdated and incorrect information.

At Delta Dental of Arkansas, self-funded groups represent approximately 80 percent of our total business. Attracting and keeping this segment of business is a high priority. (The remaining 20 percent of our business is fully insured and receives exactly the same focus on speed and accuracy of claim payment.) Consequently, the best dental insurance companies are actually more focused on paying claims quickly and efficiently and on performing exceptional customer service than on premiums.

2 “Timely Payment & Customer Service”

When I arrived at Delta Dental, I was amazed to see the lengths to which the company goes to pay claims as accurately and quickly as possible. This went against everything I had been told about dental insurance companies. Granted, I’m talking about the company for whom I work, but hear me out.

When insurance companies bid on a large employer’s business they are often required to complete what is called a “Request for Proposal” (RFP). The employer will typically provide a document to the bidding insurance carriers asking questions about the carrier’s protocols and performance. Specifically, they want to know how long it takes to process a claim and what the accuracy rate is. In addition to claims processing, they want to know how long it takes to answer phone calls and how quickly they can resolve problems.

If an insurance company does not have a record of processing claims accurately and quickly, large employers will not even look their way. Today, many large employers even require performance guarantees with financial penalties to ensure that claims are paid in a timely manner and that phone calls are handled promptly. In such cases, delayed payment of claims results in financial penalties from the group and reduces any profit an insurance company stands to gain for the processing of claims.

3 “Benefit Levels & Maximums”

“The annual maximum was $1,000 when I graduated dental school ten years ago and it has not increased since.” Chances are you’ve heard something like that before.

When it comes to offering an annual maximum, from the insurance carrier’s perspective, the sky is the limit. The only question is how much sky is an employer willing to pay for.

Many self-funded groups hire consultants that specialize in insurance plan design to help establish the benefits for their group, including the benefit levels, limitations and annual maximum.

The insurance company will gladly set the annual maximum as high as the employer wants and make the benefits as rich as the employer would like; however, the increase in benefits also increases the cost in premiums to their employees. One of the most effective ways to keep dental insurance premiums affordable for employees is to control the maximum amount of money paid in claims per subscriber. For this reason, the majority of groups elect to stay in the $1,000 annual maximum range.

Keep in mind, dental insurance was never designed to be as comprehensive as medical insurance due to cost. Still, dental plans have many advantages over medical plans – lower deductibles, more preventive services paid at 100 percent and cost sharing for more expensive services to help keep the coverage affordable.

Unfortunately, when my career began, I did not have access to a resource as valuable as the American Association of Dental Office Managers. Learning by trial and error, I fought the system and tried to out-smart it only to learn that I did not completely understand the system to begin with.

Only when I decided to communicate with key people at insurance companies did the system start to make sense to me. I look forward to helping the insurance system make more sense to you. Hopefully, you can learn from my early mistakes and misperceptions, avoid making them yourself and help lead your office through many profitable years to come.