03/22/2013

Delta Dental Premier fee cut: What we know


Since learning of Delta Dental’s decision to cut fees an expected average of 8 to 12 percent for its Premier product, CDA has pressed Delta for more specific details about the impending fee reduction. CDA will continue to provide information as soon as possible to keep members informed.

Delta’s authority to reduce fees: Delta’s individual contracts with providers do not guarantee a specific level of fees, but provides Delta flexibility to readily change provisions of its contract, even fees paid, provided it gives providers adequate notice. Neither state laws nor regulations dictate a particular level of reimbursement from health plans. However, Delta will need to file its intention to lower reimbursement fees with the State Department of Managed Health Care, requiring a DMHC review before a fee change is implemented. While there is little basis for a legal challenge to a Premier fee reduction, CDA will carefully monitor the implementation of the reduction when it occurs and consider what action might be possible within the limits of the law, especially the requirements of AB 2252, CDA-sponsored legislation enacted this year that requires dental plan providers to be given 45-day notice prior to material changes to the plan’s coverage and payment policies.

The purpose of the cuts: Delta has not communicated its reasons for deciding that Premier reimbursement should be cut. However, we know that the marketplace for health care, including dental, is significantly changing due to the impact of the flat economy and the implementation of federal health care reform. The economy has forced employers to focus on cost reduction of employee benefits, in many cases reduced premium costs. According to Delta, no employer group has purchased the Premier product from Delta in more than three years. The number of enrollees in Premier has been decreasing for a number of years, such that Premier now represents only 17 percent of Delta’s business in the state.

Timing and impact of fee reduction: The decision to reduce Premier fees was confirmed by Delta, which has indicated that a fee reduction will likely happen in the latter part of 2013. While further details have not been provided, Delta indicated that reductions will be based upon an assessment of each provider’s current fee filings, not an across-the-board 8 to 12 percent fee cut to every provider. This could mean that some providers will see smaller or larger fee cuts — Delta has not yet provided that information.

Why announcement of reduction came from CDA: While Delta’s board made its decision around the first of the year, Delta representatives have maintained that it didn’t want to formally announce the reduction in fees until it settled on a date to make that reduction and had determined how the fee cut would be applied. CDA is committed to keeping members informed, and we believe it was our responsibility to share this information as soon as we were made aware of it, even if it meant making an announcement prior to Delta issuing its formal provider notification. It is vital that our members have all the information that is available, to enable an analysis of how such a cut will impact practices, and to plan early to make decisions necessary to adjust to the cut. 

The possibility of CDA action against the cuts: Federal antitrust laws prohibit collective actions in the marketplace to either set or influence prices, including fees paid for services by dental benefit companies. While antitrust laws permit legal challenges through litigation, including class actions, such legal action would have to be based on a clear violation of law or contracts that are in place. Not enough information is currently known about the fee reduction decision or how it will be implemented to identify anything that is actionable. While CDA will consider all options as this fee cut is implemented, at this point the best approach is to obtain and disseminate as much detailed information as we can gather and to provide dentists with resources to make individual business decisions to help their practices adjust to the cut. 

CDA’s supposed governance of Delta: A widely held misunderstanding is that CDA was involved in the creation of Delta’s predecessor, the California Dental Service, and was influential in Delta’s early operation, but that CDA eventually lost control of Delta. This is not true. CDA did not start Delta. While there have always been efforts made by CDA to meet with Delta on issues of concern to dentists, CDA has never had a direct or indirect business relationship with Delta. Some dentists, including CDA members, did start these dental service organizations long ago, but CDA has never had an ownership interest in Delta.

Updating current Delta fees:  A freeze on Premier fees has not been announced as part of the decision to cut Premier reimbursement. Dentists should consider proceeding with submitting their annual fee increases, particularly if one’s Premier fees haven’t been updated in a few years. It is recommended that you review your Delta Dental provider agreement and Dentist Handbook to see if you meet the established criteria for an update before submitting a fee increase. 

Additional assistance:  There are several tools available on the CDA Compass to assist members in evaluating the impact of a fee reduction. These include Choosing a Dental Practice Model and the Dental Benefit Plan Handbook, Verification and Explanation of Dental Benefit Coverage. These resources address how a plan mix affects the practice and what to consider when contracting with new plans or evaluating existing plan contracts. Educating yourself about how this change may impact your patients and your practice is an important first step. The decision to become or continue as a participating provider with any plan is an individual choice each dentist must make on his or her own. Evaluating your existing contracts with dental benefit plans by utilizing the tools provided on the CDA Compass will assist with these decisions.

For more information about Delta Dental’s decision to cut fees, visit our information page on Delta's fee reduction.





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