A dentist enrolled in a Preferred Provider Organization (PPO) is subject to what is known as “fee capping” of non-covered services.
Fee capping occurs when a dental plan does not cover a procedure, but the PPO still controls the fee billed to your patient.
When engaging in a PPO contract, you agree to not bill the patient above the agreed-upon maximum allowable negotiated fee schedule. Whether you are subject to fee capping depends on the type of plan and any state laws that may or may not apply.
Two types of dental plans
Your practice will typically fall under one of two types of dental plans. These are self-funded and federal or fully insured policies.
Understanding the differences impacts how fee capping is applied.
1. Self-funded and federal plans
A self-funded plan is one in which the patient’s employer is 100% financially at risk for all claims paid.
The employer typically hires a third-party administrator (TPA) such as Delta Dental to administer their dental benefit plan. An employer may also administer their plan, but most self-funded employers hire a TPA.
Self-funded plans are not required to follow any state insurance laws and do not fall under the jurisdiction of a state insurance commissioner. A self-funded plan may choose to follow any state insurance laws if they like but are not forced to.
A federal plan works like a self-funded plan.
The federal employer hires a TPA such as United Concordia, or it could be Tricare®. Either way, a federal plan does not and will not adhere to any state insurance laws. All provisions of the federal dental plan, as established in the dental plan document, apply.
Self-funded and federal plans fall under the Employee Retirement Income Security Act (ERISA). The ERISA act of 1974 is a federal law that sets minimum standards for most voluntary retirement and benefits plans established by private industry.
ERISA rules protect individuals enrolled in these plans.
Self-funded plans are typically large corporations such as Coca-Cola, Boeing Aircraft, or Wal-Mart. Some benefit cards may state TPA or administered by administration services only (ASO).
A few states have legislation that requires a fully-insured plan to indicate the type of plan.
Hopefully, all states will adopt this law, and it will be easier for dental practices to know the difference. Until then, look for sample verbiage on the card, especially those of large corporations.
2. Fully-insured Plans
A fully-insured plan is one in which the payer is 100% financially at risk for all claims paid.
The insured or employer pays a monthly premium directly to the payer, such as Blue Cross Blue Shield, in exchange for plan benefits.
A fully-insured plan follows the insurance laws of the state in which the plan originated (sold). A fully-insured plan falls under the state insurance commissioner.
What you need to know about fee capping of non-covered services
There are currently 39 states with fee capping legislation.
Fee capping legislation prevents a dental PPO from controlling your fee for non-covered services, allowing you to charge the full fee.
If your state has a fee capping (non-covered benefit) law, it only applies to fully-insured plans sold in your state.
For states with fee capping laws, the fee may be controlled depending on if and how the state defines a covered service.
If your state has a fee capping law (non-covered benefit legislation) but defines a covered service as “a service in which benefit would be available,” but a limitation of the plan was applied resulting in no payment or payment of an alternative benefit, then the PPO can control your fee.
A few examples include:
- A waiting period limitation applies to the claim, resulting in no payment.
- The patient met their annual benefit maximum, resulting in no payment.
- A patient receives three prophylaxis treatments in one benefit year, but the plan only pays for two. The frequency limitation is applied to the third prophylaxis since it is a covered service.
For each of the above examples, a plan may control your fee in these instances.
The patient’s financial responsibility is the contracted fee, not your full fee submitted or standard fee (UCR of the practice).
Know your state laws. Know how or if your state with fee capping legislation may or may not define a covered service.
Read EOBs carefully to ensure you are charging your PPO patient the correct fee. Do not assume with your state’s fee capping legislation that you can always charge the patient the full fee for a service.
Understand the difference between self-funded, federal, and fully-insured plans and what laws each one follows.
Contact your state dental association or dental board for information regarding fee capping legislation specifics in your state.
Meet the Author
Dilaine Gloege, CDA, CPC is Chief Claims Officer and Director of Brand Management/Education for Dental ClaimSupport… This text opens a new tab to the company’s website…, with over 30 years of dental experience in the industry.
Dilaine spent six years as a call center support supervisor for Insurance Solutions Newsletter and Practice Booster. She helped thousands of practices with their medical and dental coding and insurance questions.
She shares her knowledge and passion through speaking, webinars, and nationwide consulting.