FAQs Regarding Third Party Payer Issues
The following is a discussion of various third-party payer practices and policies, which has appeared as a series in the CDA Update.
Fee filings on claims to dental plans
Audits of dental offices
Waiver of Copayment
The ins and outs of dental plan annual maximums
Provider Dispute Resolution
Update fee schedules to keep up with market rates
Payer demands for refunds
Basic procedures can ensure accurate coordination of benefits
Prompt-payment of claims
Fee filings on claims to dental plans
Q: When filing a claim with a dental plan, should I use the fee allowed by the plan for each procedure, or my own “usual and customary” (“UCR”) fees?
A: If you are a participating provider in a dental plan’s panel of dentists, what you receive as reimbursement for care and treatment of the plan’s enrollees is dictated by the contract you’ve signed with the dental plan, and this amount will usually be less than your usual and customary fees. Unless a plan’s contract actually prohibits a participating provider from submitting claims using their full usual and customary fees (and we aren’t aware of any that do prohibit this), a dentist may submit claims to the dental plan using their full fees. In fact, there is often an advantage in doing so.
For example, in early 2004, Delta Dental of California switched to a methodology for determining its fee allowances based not on fees filed by participating dentists, but by all claims submitted to the company. While Delta has always left to the dentist the decision whether to submit usual fees or the allowance on claims, it recognizes there is an advantage to filing claims using the usual fee, and not simply the allowance. Delta, of course, will only pay the allowance for procedures. Delta has stated that in determining payment allowances from submitted claims, it looks only at those submitted fees that are above the allowance for particular procedures. However, since allowances are now determined from submitted claims, CDA believes that dentists should submit their usual fee on claims, not the allowance amount, in order to give Delta a more accurate data on the actual dental fees being charged within each marketplace.
There is also an advantage in submitting one’s usual fee in a case involving coordination of benefits between two dental payers. If the patient’s primary plan is a preferred provider organization (PPO), and the secondary coverage is a traditional plan, while the primary carrier will discount the amount it pays according to its contracted allowances, the secondary carrier will likely calculate what it owes in balance based upon the full amount claimed by the dentist. In other words, in filing a claim to both carriers based upon the discounted allowance of the first plan, a dentist may be discounting him- or herself out of a higher reimbursement from the secondary plan.
Finally, many plans see an advantage to providers filing claims at their full usual and customary fees, since the explanation of benefits provided to their enrollees will demonstrate the benefit of the discount they receive by subscribing to that plan.
There may be additional bookkeeping required for office managers in submitting claims using one’s full usual and customary fee, and then reconciling those claims with the discounted allowance amount received. However, many of the practice management software products now on the market can make the conversions between an office’s UCR and the discounted allowance. Notwithstanding this, there are a number of reasons to always submit your full usual and customary fees when filing claims with a dental plan.
Audits of dental offices
Dentists frequently inquire about the audit process conducted by dental plans, which are usually prompted by the receipt of a notice that the office will soon be audited. “What will the auditor be looking for?...Can auditors access patient records?...What if the audit finds deficiencies?”
The authority of a dental plan to conduct dental offices audits stems from a combination of two sources: the California law which regulates managed health care plans (the Knox-Keene Act), and a dental plan’s contract with its network providers.
Under the Knox-Keene Act, plans are required to enter into contracts with members of their provider networks to define the role of each in delivering services to enrollees. Regulations stemming from the Act require provider contracts to assure that each “plan shall have access at reasonable times upon demand to the books, records and papers of the provider related to the health care services provided to subscribers and enrollees, to the cost thereof, to payments received by the provider…and…to the financial condition of the provider.”
In sum, the Knox-Keene Act requires plans to assess dental practice records related to quality of patient care and financial records, and requires plans to include both a notice of this authority and a written agreement to this access from dentists who become contracted providers within plan networks. Hence, a good source of information about dental plan audit requirements will most likely be the contract the dentist signed when joining the plan’s network.
One thing of note about state requirements related to plan audits of providers’ offices is that audits are for the purpose of enabling a dental plan to show to state regulators that it is providing quality care to its enrollees, and that the overall provider network is financially sound. The audits are not so much a check on the dental office as they are a check on the dental plan themselves.
Typical questions dental offices ask about the audit process are:
Q: Does an auditor have the authority to access patient records?
A: The short answer to this is, “yes.” With the enactment of both state and federal patient confidentiality laws, there is a genuine concern and a legal responsibility on the part of the dental office to assure that unauthorized individuals do not have access to patient records. However, both state law and the federal HIPAA Privacy Rule recognize the right of third party payers to access the health records of their enrollees. Under HIPAA, for instance, protected patient health information can legitimately be used for the purposes of treatment, payment for treatment, and for an umbrella category of functions called “health care operations.” Under the definition of “health care operations” are activities pertaining to the assurance of quality of care. Hence quality of care audits, such as those conducted by third party payers, come under the permitted use of protected patient records by the recently enacted federal privacy rule. Also, dental plans are themselves regulated entities under the HIPAA Privacy Rule, and as such they have a legal obligation to also protect the confidentiality of patient records in their possession or to which they have legal access.
Prior to the advent of the HIPAA Privacy Rule, dental plan auditors would have access not only to the records of their own enrollees, but would often compare those records with the files of non-enrollees as a test or control group sample. CDA believes that under the HIPAA Privacy Rule dental plans are now prohibited from accessing non-enrollees’ records, and dental offices subject to an audit should be aware of this prohibition.
Q: How can the dental office prepare for an announced audit?
A: Again, the specific authority of a plan to conduct an audit of a dental office is granted both in state law and is required to be included in a plan’s contract with its network providers. In addition to referencing the audit within the provider contract, plans may include more detailed information on the scope of a quality assurance audit in its dentist handbook. In 2002, CDA assisted the California Association of Dental Plans (CADP) in its development of a standardized quality assessment audit tool that could be used by every dental plan licensed in California. While state law does not require each plan to use a uniform audit tool, CADP has been encouraging its member plans to utilize the standardized tool developed in 2002. The larger dental plans in California have adopted this tool. Also, CADP uses the standardized audit tool as the basis of its auditor certification training.
The standardized audit tool contains a checklist and evaluation measures for both an on-site assessment and structural review of a dental office, and an assessment of the process of patient care. The structural review includes the categories of accessibility (e.g., whether the office has a reasonable appointment schedule for plan members; patient access to emergency services); the quality and maintenance of both the facility and equipment; the existence of emergency procedures and equipment; and compliance with sterilization and infection control requirements. Under an assessment of the process of patient care, auditors look at documentation in patient files (e.g., patient medical history information; dental history; documentation of baseline oral examinations; treatment progress notes); quality of care categories (e.g., a record of radiographs, indicating quantity, frequency, and technical quality); the existence of a treatment plan (e.g., including sequencing of procedures; a record of the patient’s informed consent); and treatment outcomes of care (e.g., diagnosis, procedures, follow-up or outcome, and referral, if required, to specialists).
Q: What if the office “fails” an audit?
A: The likelihood of a dental office actually “failing” a quality assessment audit is fairly low – probably nonexistent. Again, the purpose of the audit isn’t so much to assess the office, but to enable the dental plan to assure the State Department of Managed Health Care that it has a high quality network of providers. The “test” of the audit is really upon the plan, not the provider, and in this sense, it is in the interest of the plan to have its offices “pass.”
However, it is likely that any given office may show a need for improvement in one or a small number of audit categories. The plan should always provide the office with the results of the audit. If any discovered deficiencies are minor, the plan may simply instruct the dental office to check-off each item when the deficiency is corrected, and send the checklist back to the plan. If a deficiency is more significant, the plan may ask for specific documentation that the deficiency has been corrected. If a large number of deficiencies are discovered during an audit, the office may be put on a list to be re-audited the following year to assure that the corrections have been made and are being adhered to. Other than this, there likely be no actual penalty for failing to meet audit categories. However, a dental office which has been audited a number of times, and has shown a reluctance or an inability to correct discovered deficiencies, may be dropped from the dental plan’s provider network. It should be noted that there is no legal or regulatory penalty for offices that fail to achieve a 100% score in an audit. Any corrective action is dictated by the individual plans themselves, so dental offices should check with the dental plans to determine what their policies are in regard to following-up with issues identified in an audit.
CDA provides a packet of information on the items included in the quality assessment audit. One may request a copy of this audit information from Roya Main, Dental Benefit Plan Coordinator, at 916.554.4974.
Waiver of Copayment
Q: Can a dentist waive a patient’s copayment?
A: Well, that depends. While this is not the answer providers want to hear, this issue continues to cause confusion and frustration among dentists because it lacks a concise and universal answer. In order to be able to answer this question, dentists must consider the contractual, legal and ethical aspects involved.
The first and most straightforward answer is that if a dentist has a contract with a third-party payer, that contract will dictate the dentist’s copayment collection obligation. In fact, most insurance companies will argue that they have no obligation to pay a claim unless the provider collects the patient’s copayment according to the terms of the contract. Unfortunately, contract language is often unclear and may not explicitly prohibit waiver of copayments, which again leaves the provider to wonder if and when a copayment waiver is permitted.
This leads one to take the next step and question what the law dictates with regard to waiving a patient’s copayment. And here, yet again, there is significant contradiction and conflicting information on the issue. Strictly speaking, California law does not prohibit the waiver of copayments, and the California Attorney General, in a 1981 opinion, went so far as to say that even routine waiver of copayments is permissible. However, the Attorney General’s opinion has been contested and in at least one California trial, the court ruled that a dentist who waived a patient’s copayment without accurately reflecting the waiver on the insurance claim, violated statutory provisions prohibiting insurance fraud and unfair competition. Moreover, unlike California law, federal law specifically prohibits waivers of copayments where Medicare or Medi-Cal (Denti-Cal) is concerned, except in very limited cases such as the extreme financial hardship of the patient.
Does this mean that as long as a provider discloses the copayment waiver on the insurance claim, the waiver is permissible? The insurance claim should always accurately reflect the actual charge for services, including any discounts given or the waiver of copayment, however, merely reflecting the waiver on the claim does not allow for routine waiver of copayments. Keep in mind that the contractual stipulations described above would still apply. While some third party payers will permit the waiver of a patient’s copayment under very specific circumstances (primarily that of extreme financial hardship), it is always advisable to check with the specific plan in question prior to adjusting the patient’s portion of the fee in any way.
If a provider is not contracted with a patient’s insurance plan and submits a claim indicating the actual amount charged for services which reflects the waived fee, the plan can use that information to correctly calculate the reimbursement rate and thus the provider can avoid allegations of insurance fraud. In this case, the provider is essentially adjusting his/her usual fee to accurately reflect what is being charged. But this does not get non-participating providers completely off the hook. If the provider is contracted with any plan, that contract may require that the provider charge that plan’s patient’s no more than what he charges patients with other forms of insurance coverage. This again requires that the provider carefully review the contract stipulations of all the plans with which he/she is contracted to determine what, if any, waiver of copayment restrictions apply.
The accuracy of the insurance claim is also the basis of both the CDA and ADA advisory opinions on waiver of copayment. Both the ADA’s Principles of Ethics and Code of Professional Conduct and CDA’s Code of Ethics find the waiver of copayment without disclosing it to the third party payer, to be deceptive and misleading, essentially constituting overbilling. The key, again, being that the insurance claims must always accurately reflect the actual fee being charged for the services rendered.
Q: Given the contractual, legal and ethical obligations pertaining to copayments, are there any circumstances under which a waiver of copayment is acceptable?
A: Under very specific and limited circumstances, when the copayment is a barrier to needed care because of financial hardship, most insurance plans will allow the dentist to waive the copayment. However, this would require the provider to clearly document the situation and notify the third party payer accordingly.
In summary, the answer to the waiver of copayment question really depends upon the specific circumstances involved and the contractual stipulations that may apply. Ultimately, the routine waiver of copayments undermines the cost sharing mechanism built into the third party payer system and raises legal concerns. While this article just begins to touch upon the various considerations that must be made, it serves to illustrate why there is no one, clear and concise answer to this question.
The information provided in this article is for educational and informational purposes only and is not intended, nor does it constitute, legal advice. Accordingly, if you have any questions about how the information in this article applies in your specific circumstances, you should contact your own personal attorney for legal advice.
The ins and outs of dental plan annual maximums
Q. Why is the cap on dental insurance still usually $1,000?
A. While some dental plans are increasing the annual maximums to amounts more than $1,000, many plans have not increased maximums in years.
The most obvious answer to the question of the seldom-changing annual maximum is that the level of the maximum is determined by the employer purchasing the employee dental benefits plan or by those negotiating benefits as part of a union contract. Administrators of dental plans typically say that they would be willing to raise the annual maximum but that this would increase the overall cost of coverage, hence employers don’t opt for a higher maximum.
Even though costs of dental materials and services continually increase, reports from the U.S. Department of Labor, Bureau of Labor Statistics, indicate that the average annual expense per person for dental care is still less than $300. One major national dental insurance company recently reported that while the annual maximums throughout the industry have generally not increased above the typical cap of $1,000, only 5.7 percent of dental patients hit that maximum.
Plans tend to design benefit packages that make it unlikely for patients to reach the cap. One means of keeping patient costs under the cap is simply not to cover the more-expensive procedures, which certainly isn’t in the interest of dental patients. Other benefit designs are increasingly covering high-cost procedures but are requiring a high co-pay or other cost-sharing mechanism from patients as a means of preventing costs from blowing past the annual maximum.
In California, the Department of Managed Health Care has been considering the possibility of prohibiting dental plans from placing certain kinds of limitations and exclusions in their benefit products and the possibility of placing limits on the level of co-pays. Forcing dental plans to cover certain procedures (perhaps even expensive procedures) and capping co-pays at a certain percentage of a procedure’s cost will likely force the issue of raising annual maximums. However, as mentioned above, any increase in the annual maximum (particularly when forced by a regulatory mandate on benefits covered) will result in an overall increase in the cost of dental benefit plans.
In an increasingly competitive dental benefits market, some plans are adjusting the annual maximums in creative ways to give themselves a competitive edge. Benefit packages offering an annual maximum of $1,500 or more are appearing in the marketplace, and at least one company allows a portion of an enrollee’s unused maximum to roll over into subsequent years.
In summary, increasing the annual maximum causes the premium to increase, and many employers and employees prefer to control costs by limiting the annual maximum. This tends to be viewed by the purchasers of dental benefit coverage as preferable to other cost-savings methods, such as narrowing the scope of benefits, or increasing the up-front cost-sharing required of enrollees.
As with anything in the marketplace, what the buyer wants or demands is going to have an impact on products that are offered. Weighing plan cost against benefits offered is usually a delicate balance, particularly when the rising cost of general comprehensive health care continues to put pressure on employers. A principal reason that annual maximums have not increased is that employers, and apparently their employees, believe that having only 6 percent of enrollees exceeding the maximums is an acceptable percentage. If patients increasingly tell their human resources offices that they need higher annual maximums, raising the maximums will likely result.
Provider Dispute Resolution
Q: What options do dentists have if they disagree with the payment decision of a dental plan?
By legal mandate, every dental plan in California is required to have a formal procedure the plan’s network members can use to challenge adverse payment practices or specific payment decisions.
Two bills passed in 2000 -- AB 1455 (Scott) and SB 1177 (Perata) -- placed “prompt pay” requirements upon health care service plans. Essentially, the requirement is to pay “clean claims” or portions of claims where further documentation isn’t needed, within 30 days. The bills also required the state Department of Managed Health Care to develop regulations requiring plans to establish internal dispute resolution mechanisms for providers to resolve billing and claims disputes.
Dubbed the “fast, fair and cost-effective dispute resolution mechanism,” the provider dispute resolution process adopted by each plan is supposed to be just that -- fast, fair and cost-effective. Among the rule’s requirements are:
* Whenever a plan changes or denies a claimed procedure, the plan is required to notify providers of its dispute resolution process and the procedures for obtaining forms and instructions for filing a challenge. Failure to provide such notification is a violation of California Code of Regulations Section 1300.71.38(b).
* Plans are required to acknowledge receipt of a provider’s dispute within two working days of receiving a provider’s formal challenge if that challenge was submitted electronically, and within 15 working days if submitted by mail.
The regulations define a “provider dispute” as a written notice to the plan “challenging, appealing or asking reconsideration” of a claim that has been denied, adjusted or contested, or disputing a request from the plan for reimbursement of a reputed overpayment.
* A plan must make a determination after reviewing a provider’s dispute within 45 working days of receiving the provider dispute, or amended dispute.
* Plans are required to appoint a principal officer who will be responsible for maintaining its dispute resolution mechanism.
* A provider dispute is to be handled and resolved by the plan without any charge to the provider; however, a plan shall not be responsible for reimbursing a provider for any costs incurred in connection with utilizing the provider dispute mechanism such as the cost of an attorney or the cost of arbitration.
A payer’s practice or policy that contradicts any of these points is a violation of state regulations.
A dispute resolution mechanism that is not “fast, fair and cost-effective,” or that in any way violates the required notice to providers of the option to file a challenge, or that violates the timeframes within which a challenge must be responded to, may be reported to the Department of Managed Health Care at www.hmohelp.ca.gov/providers/clm/clm_comp.asp.
The “prompt pay” laws and rules also define what is termed an “unjust” or “unfair payment pattern” (www.cda.org/cda_member/news/unjust.pdf). If such payment patterns or policies persist, they should be communicated to the Department of Managed Health Care for possible investigation and enforcement action.
The Department of Insurance also has regulations governing “fair claims settlements.” Information about filing a request for assistance with the California Department of Insurance is available online (www.insurance.ca.gov). However, the Department of Insurance does not accept reports of unfair payment practices from health care providers. Even where there is an assignment of benefits from the insured to the provider, the department only recognizes the contract between the patient and the insurance company. If a provider is experiencing late payments from dental insurance companies, he or she may fill out the printable request, found at the Department of Insurance website cited above, for assistance on behalf of the patient. However, the request will need to be signed and submitted by the patient.
While state laws and regulations enable providers to contest payment decisions, the regulations are less specific about what form a plan’s dispute resolution process should take. Some plans may rely upon a peer review process for resolving provider/payer disputes, but other mechanisms may be used, and each mechanism is the unique creation of each dental plan. Since the requirement to have a dispute resolution process in place is intended to establish a level of providers’ rights in law, CDA is interested in any individual process that does not provide due process or a fair hearing for the provider or consideration of the merits of the provider’s challenge.
For more information on filing a provider dispute, whether the complaint is about a plan’s payment decision or about the process itself, please contact CDA at 800.736.7071, Ext. 4974. A pattern of possible unfair payment or business practices identified by CDA from member complaints may be taken up with the CDA Policy Development Council for review and consideration of appropriate action.
A member contacting CDA about a payment dispute with a dental plan should be prepared to share supporting documentation such as copies of claims, remittances, correspondence with the plan, and responses from the plan. While CDA does not represent members in presenting their disputes to dental plans, it can provide information and guidance in pursing a challenge.
Update fee schedules to keep up with market rates
Q. I share my dental office with a younger dentist -- a recent dental school graduate who is just starting out with his own practice. While he has his own patients within his practice, we do share administrative staff as a cost savings to both of us. The staff member who handles our claim submissions noted that the Delta Dental fee allowances for procedures approved for the other dentist are higher than the allowances that I have. How is it that while we are not only in the same market area, but also share the same office space, the other dentist who’s just starting out has higher allowances than I, even though I’ve been in practice, and a Delta provider, for more than 20 years?
A. Since this question deals specifically with fee allowances among Delta providers, it should be noted that Delta’s stated policy is to set its allowances for basic dental procedures at the 80th percentile of the usual dental fees for a given market region. When it modified its fee-setting methodology in early 2004, Delta stated in a mailing to its network dentists that “The allowances will be based on two factors: 1) measure of the increase represented by each new fee, and 2) the maximum plan allowance for your region and specialty (that is, the 80th percentile).” On its website, Delta elaborates on the “measure of increase” factor by stating, “The allowances that Delta mails to you after processing your fee filing are calculated using several components: your usual fees, your regional customary fees, your grandfathered fees, and your previous fees.” I emphasize previous fees. Delta explains what it considers when looking at a dentist’s “previous fee”: “When you file a new fee for a procedure, Delta compares it to your previous fee. We also calculate the number of months since your last fee revisions. If your new fee exceeds a percentage increase allowed by Delta for that period, your new allowance is limited to your previous fee plus the allowed percentage increase.”
Delta factors in something akin to a “consumer price index” change in determining whether to accept a dentist’s usual fee as the allowance. The dentist’s fee history will be factored into new allowances, so Delta may not necessarily bring a dentist’s allowances up to the full 80th percentile if a dentist’s new fee submission is out of line with the history of previous increases reflected in a dentist’s fee submissions -- that is, given the dentist’s fee history and the percentage increase (similar in concept to the change in consumer price index) in dental fees for a market area. In other words, if a dentist’s history of fee submission has equated to a 3 percent annual fee increase, allowances will not be increased, say 8 percent, even if an 8 percent increase would bring the dentist’s fee allowances to the market area’s 80th percentile. Delta may discount fees further depending upon the dentist’s fee history if the dentist has traditionally received less than the 80th percentile overall. Delta will likely grant some increase in that dentist’s fee allowance, but not to the full 80th percentile. It appears that this scenario mostly applies to those dentists who have not regularly submitted new fee schedules.
The moral of the story here is that dentists who have not submitted updated fee schedules to Delta for some years may actually be falling behind the average fee schedule in their local market area, and trying to close the gap in one fee submission won’t be possible. CDA has heard from numerous dentists who report that they have not submitted new fees to Delta in years. These are dentists who have likely fallen behind the typical dental fees in their local market. This is most likely the reason why the dentist with a 20-year experience in Delta had lower allowances than the new dentist who was sharing his office.
All of this is to say that dentists should submit their fee schedules to Delta on a regular basis. In fact, with the recently revised fee-setting methodology, dentists should not be reticent to submit their fee schedules for new allowances, for two reasons:
First, Delta has grandfathered in fee allowances such that if previously approved fees for some procedures are higher than the 80th percentile in the market area, Delta will not lower these fees to the 80th percentile. Second, Delta allows dentists to submit revised fee schedules one year after the submission of the most recent fee submission. If a dentist’s fees have changed significantly, with Delta’s policy of grandfathering older, more favorable allowances, and the ability to submit revised fee schedules annually, there isn’t any reason to hold off new, revised, fee submissions. Failure to do so may result in falling behind the market.
Payer demands for refunds
Q. I obtained a pre-authorization and proceeded to treat a patient. The patient’s insurance plan paid the claim. The plan has now contacted me and is demanding a refund because the patient was not eligible at the time of treatment. Do I have to refund the insurance plan?
A. Unfortunately, the above scenario is not rare; and CDA often receives calls from providers requesting guidance when presented with this type of refund request. In this situation, the plan erroneously authorized treatment and paid the claim. Under narrow circumstances, repayment in this situation may not be necessary.
One California court ruled that a provider of services that had been paid by an insurance company by mistake need not return the overpayment. In the 1992 case, City of Hope Medical Center v. Superior Court, a hospital provided medical care to a patient. The hospital was billed and was paid by the patient’s insurer. The insurer later decided the patient’s treatment was experimental and not covered by his policy. When the hospital refused the insurer’s request for a refund, the insurer sued the hospital. The court found that the hospital was not required to refund the overpayment. Many other state courts have decided similarly for providers.
The courts find that insurance companies are not entitled to restitution when there has been a mistaken payment only if:
* The payment was made solely because of the insurer’s mistake;
* The provider made no misrepresentations to induce the payment;
* The provider acted in good faith without prior knowledge of the mistake and had no reason to suspect that any of the payments for services rendered were in error, and;
* The provider was not unjustly enriched, i.e., the provider does not retain any amounts above that which was legitimately owed.
It is essential for providers to understand the difference between a payment made in error as described above and an overpayment. In the situation described above, the provider took the necessary steps to verify the patient’s eligibility, provided treatment based on this information, and was paid according to the terms of the contract with the insurance company.
An overpayment, on the other hand, is a situation in which the payment clearly exceeds the contractually agreed upon fee. For example, if a provider’s contracted fee for a root canal is $850 and the insurance plan reimburses the provider in the amount of $950, the plan is entitled to a refund of the overpayment of $100. In this situation, a dentist who is notified in writing of an overpayment must reimburse a health care service plan or health insurer within 30 working days of receipt of the notice of overpayment, unless the overpayment is contested.
Recognizing the numerous and multifaceted nature of refund requests, CDA staff are available to help answer questions and provide resources when dental offices are faced with a refund request.
The information provided in this article is for educational and informational purposes only and is not intended, nor does it constitute, legal advice. Accordingly, if dentists have any questions about how the information in this article applies to specific circumstances, they should contact their personal attorneys for legal advice.
Basic procedures can ensure accurate coordination of benefits
Q. How do dental benefit carriers coordinate the benefits of patients with dual coverage, and how might a dental office ensure that this coordination is done correctly?
A. Every carrier of a dental benefit plan has a policy to coordinate the payment of benefits when enrollees or policyholders have more than one company insuring them. For the individual who has dual coverage, it is common for companies to consider the payer that has covered the person the longest as the primary carrier. Or, if a person is covered by a benefit plan through his employer, and is also covered by the benefit plan of the spouse’s employer, the person’s coverage through his or her own employer is usually deemed the primary carrier. If the patient is a dependent child, the payer who covers the parent with the earlier birthday in the calendar year is often considered the primary payer.
During an appointment, it is always important to perform the following procedures:
* Confirm whether the patient’s insurance situation has changed from the previous visit;
* Check specific information on all the plans or insurers that cover the patient;
* Determine in each case who is the primary and secondary carrier, and, if there is doubt about this, to contact a customer or provider-services representative with each plan to determine which is primary; and
* Attach the evidence of benefits form from the primary payer when submitting a claim to the secondary payer.
These are simply standard procedures that a dental office should follow to ensure accurate coordination of benefits.
Payers depend upon accurate information from the dental office to correctly coordinate a patient’s benefit payments. CDA has been asked why payers don’t simply contact their enrollees or policyholders to determine coordination of benefits -- in other words, why doesn’t the burden of coordinating benefits rest with the patient. The answer to this is that dental benefit carriers rely upon the one submitting the claim to make an initial determination as to primary and secondary payers. If the dental office has submitted the claim on behalf of the patient, the carrier will likely refer any questions about coverage of the patient with other carriers back to the dental office. The act of a dental office sending in a claim indicates that the patient has granted the office assignment of benefits, and the carrier assumes that the office has all pertinent information about the patient’s other coverage.
Most companies, in denying the payment of a portion of a claim based upon a determination of coordination of benefits, is likely doing so because they have record of the patient being covered by another carrier. In addition, a denial on a claim for a reason or need to coordinate benefits will likely be sent not only to the dental office, but also to the patient. If there is confusion over coordination of benefits in the event of a payment denial, the dental office should contact the patient to ensure that the information the office has regarding coverage is accurate. In this situation, the patient has likely received his or her own notice from the carrier that payment has been denied.
Q: How is it that a patient’s secondary dental plan, while claiming to coordinate benefits with a primary plan, may end up paying nothing on the patient’s remaining bill?
A: Many dental plans contain what is referred to as a "non-duplication of benefit" clause in the evidence of coverage section of their contract with enrollees. What these non-duplication of benefit clauses specify are a limit on what the plan will reimburse, the limit being the amount they would have paid had they been the primary (or only) payer. As a very simple example:
Company A is the patient's primary insurer, and will pay 90% on a procedure. Company B is the patient's secondary insurer, and will pay 80%. A claim is submitted to Company A for $100, so it pays $90. Company B won't pay 80% of the remaining $10, but, theoretically, covers 80% of the whole claim. If Company A has already paid 90% of the claim, that reimbursement has met and exceeded the coverage responsibility of Company B, and it owes nothing, if Company B has a non-duplication of benefit clause in its contract with the enrollee.
Conversely, however, if Company B is the primary carrier and paid $80 on a $100 claim, Company A may then pay an additional $10 because its benefit level covers up to 90%, and it will make up the difference between what Company B paid and 90% of the total bill.
In the first scenario above, the dentist is prohibited from collecting anything in addition from the secondary carrier not only because of the non-duplication of benefit clause in the plan's contract with the enrollee, but also, probably, because of provisions in the provider contract that the dentist signed with the secondary plan (assuming he/she is a network provider with that plan) to bill up to the lowest contracted fee -- they have essentially agreed by contract not to collect any additional amount from the patient.
Expressed another way, when the patient is covered by two plans, the dentist is limited to billing the patient up to his/her lowest contracted fee. In this case, the dentist is limited to balance billing the patient only up to his or her lowest contracted fee. The reason for this is that otherwise the patient could potentially be responsible for a higher out of pocket cost with dual insurance than they would have been with a single insurer. For example, let's say under a situation in which a patient is covered by only one plan that a dentist’s UCR for a particular procedure is $100, where the plan pays $70, the patient is responsible for a $10 co-pay, and $20 is written off as part of the dentist's negotiated fee with the plan. In this case, the dentist has agreed to accept $80 in total for this particular treatment.
Now, as an example of coordination of benefits between two plan, let’s use the above scenario as an example of the patient’s secondary payer. The patient goes to a dentist who is contracted with this secondary plan, but not with the patient's primary plan and the dentist bills $100. The primary plan pays 80% and the secondary plan does not pay anything in addition to that because the dentist has agreed per contract with the secondary plan that he or she will accept 70% as payment in full. If the dentist were allowed to balance bill the patient up to the full UCR, the patient would be responsible for a $20 co-pay versus a $10 co-pay had the patient not had the dual coverage. The bottom line is that the dentist has agreed to accept $70 per his or her contract with the patient's secondary plan, but because the patient had dual coverage the dentist is actually getting $80 for the treatment. To then bill the patient up to the full UCR would be taking advantage of the patient's dual coverage and violating the terms of the contract with the secondary plan and the balance the dentist is allowed to bill the patient.
Basically, the reason that a secondary payer may not pay anything on a claim is because of either 1) a non-duplication of benefits clause in the plan contract with the enrollee, and/or 2) the provider's agreement when signing on with the secondary plan's network to accept the lowest contracted fee between the two plans.
This situation is fairly common among full-service medical carriers, but is not as common (although it is a growing phenomenon) among dental carriers. As a secondary carrier, some dental plans or insurers will pay a portion of a residual amount that the primary didn't pay, so it is always wise to bill the secondary carrier. However, as noted, more and more dental plans are adopting policies that have been common among medical plans, and placing non-duplication of benefit clauses into their contracts with enrollees.
It should be noted that these policies – non-duplication of benefit clauses, and provider agreements to accept the lowest contracted fee between two plans – are adopted by plans as ways of holding down the cost of premiums. If a secondary carrier were to pay for a portion or the entire residual fee not paid by the primary carrier, there would be a cost to the patient or the purchaser of the coverage at the other end, in terms of a higher premium. Simply stated, these "non-duplication of benefit" clauses are plans’ means of keeping down the cost of to consumers.
Prompt-payment of claims
Q: How soon must a dental plan or insurer pay on submitted claims?
A: California’s “prompt pay” law went into effect in January 2001. The law requires preferred provider organizations (PPOs) and insurers to pay non-contested claims within 30 working days from the receipt of the claim. (HMOs must pay within 45 days.) A contested claim is one for which the plan has not received the completed claim and all information that is necessary to determine the payer liability for the claim, or has not been granted reasonable access to information concerning provider services.
Where a claim, or portion of a claim, is contested, a plan or insurer must notify the dental care provider who submitted the claim in writing that the claim is being contested, and why, within that same 30 working day period.
Failure to reimburse an uncontested claim within 30 days is subject to a penalty of 15 percent of the amount of the claim, per annum. This interest starts accruing on the first calendar day after the 30 day time period for paying the claim has lapsed. The plan shall automatically include all interest due with the payment of the claim.
A plan which habitually fails to pay uncontested claims within the required 30 day period may be guilty of what the Knox-Keene Act characterizes as an “unfair payment pattern” (Health and Safety Section 1371.37). Health care providers may report evidence of plans’ unfair payment patterns to the Department of Managed Health Care’s Office of Plan and Provider Relations at 877.525.1295, or may file a complaint online through the department’s Internet portal at www.hmohelp.ca.gov/providers/clm/clm_comp.asp. Prompt-payment requirements also apply to insurance companies, and are enforced by the State Department of Insurance. Dentists may file a complaint about delayed payments to the Department of Insurance through its web site at www.insurance.ca.gov/0100-consumers/hcpcomplaints.cfm, or by calling 800.927.HELP (4357).
For information on these or other third-party payer issues, please contact CDA Resource Center staff, Kira Hough at 916.554.4969, or Greg Alterton in the CDA Public Policy Division at 916.554.4994.
09/07