Patients with some form of dental coverage or benefit to offset their out-of-pocket cost are more likely to accept a treatment plan. Offering an in-house discount plan can assist with attracting new patients and help retain existing patients, particularly those patients without any form of dental coverage.
What is an in-house discount plan?
A discount plan is offered by the dental practice and purchased by a patient for an annual fee in exchange for a discount on dental services. However, the discount plan is not an insurance plan; instead, it is a written agreement between the patient and the practice that offers the patient a discount for services provided.
In California, the Department of Managed Health Care has authority to regulate discount health plans, and any dental practice that wishes to establish an in-house discount plan should have the plan’s design reviewed by the department. Additional information on how to submit a discount plan for the department’s review is addressed later in this document.
The department reviews how such discount health plans are marketed and sold to consumers. The department’s mission is to protect consumers’ health care rights and, therefore, to ensure that any discount products are realistic, carefully laid out and do not create unnecessary financial risk for the patient.
The discount plans the department regulates are usually larger discount products with substantial provider networks willing to extend a discount to consumers who buy into the discount plan. Simply put, a discount health plan functions like a discount or wholesale warehouse retailer. The consumer purchases an annual membership and then can purchase goods and services at a significant discount to regular retail prices. Without the membership, access to the discount is not available.
How does an in-house discount plan differ from dental plan insurance?
In discount plans, the patient bears the risk. There are no claims submitted for treatment; the plan pays nothing, but the patient does experience a savings on care.
The DMHC is also concerned that a discount health plan’s network of providers is authentic (usually meaning that the plan has some sort of agreement with its network of providers to notify subscribers of discounted care available through those providers). Also, the department is concerned that the advertised discounts are actual discounts ― that if a discount health plan is claiming that a patient can save, for example, 15% on the cost of care, the patient is actually experiencing a 15% savings off the provider’s usual and customary fees.
Large, regional, commercial ventures marketing discount plans are required to be licensed by the DMHC under the authority of the Knox-Keene Act. Small, practice-based discount arrangements may not rise to the level of needing to be licensed as a Knox-Keene plan, but the department would like to review such discount designs a practice may have, just to make sure that the discount plans being offered are legitimate and transparent for consumers.
If the in-practice discount arrangement is to be offered on a subscription basis, the department will want to know how the discount is marketed. If it’s marketed beyond the practice itself, the plan may rise to a level of concern that warrants it becoming licensed as a discount health plan.
Dentists should note when informing patients or prospective patients, that discounts are available for cash-pay patients.
Section 1051 of the regulations to the Dental Practice Act require that certain information be made available to patients. An advertisement of a discount must (1) list the dollar amount of the non-discounted fee for the service, (2) list either the dollar amount of the discount fee or the percentage of the discount for the specific service, (3) inform of the length of time, if any, the discount will be honored, (4) list verifiable fees pursuant to Section 651 of the Business and Professions Code and (5) identify specific groups who qualify for the discount or any other terms and conditions or restrictions for qualifying for the discount.
What type of patient might be interested in an in-house discount plan?
- Patient without employer-, state- or federal-sponsored dental coverage
- Retired patient
- Entrepreneur or self-employed patient
- Patient looking for a better return on investment and/or less restrictive coverage than offered through their employer-sponsored dental coverage
What do in-house discount plan designs look like?
Similar to Costco or Sam’s Club memberships, in-house discount plans can vary from one dental practice to another. Some practices may choose to only offer only one discount plan, while other practices may decide to offer several plan designs. Since the dental practice has control over the discount offerings, the plan can be developed based on the needs of the patients.
The ADA Council on Dental Benefit Programs has developed a toolkit to help dental practices evaluate whether an in-office dental plan option is right for them. The toolkit includes:
- Common legal considerations and implementation steps
- Checklists
- Regulations listed by state
- Sample letter to introduce the program to patients
The ADA toolkit also contains a calculator in Excel spreadsheet format to help predict the financial impact of adopting an in-office dental plan. Please keep in mind that the ADA toolkit is meant to offer broad suggestions and information. Dentists offering an in-house discount plan are responsible for obtaining the necessary approval from the appropriate state regulator.
Before you launch your discount plan
If your practice is considering offering an in-house discount plan, be aware that the California Department of Managed Health Care has authority to regulate discount health plans in California. As already explained, the department has asked that any dental practices wanting to establish an in-house discount plan should have the plan(s) design reviewed by the department.
Submit the in-house discount plan(s) design to the below address for review and approval prior to implementing it in the practice. Include a copy of the proposed patient agreement along with the proposed marketing plan.
Office of Legal Services
California Department of Managed Health Care
980 Ninth Street, Suite 500
Sacramento, CA 95814
Find dental benefit plan resources on a wide range of topics in the CDA Practice Support Resource Library.