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Is it a covered benefit? Understanding the noncovered services law (Article 9/26/2018)

Understand the CA law that regulates what dentists can charge patients for procedures that the policy does not cover AB 2275.

A common question received by Practice Support is whether a dental plan that a dentist is in contract with can dictate fees on procedures that the policy does not cover. What CDA members specifically want to know is what the dentist can charge the patient. I wish I could provide a simple answer, but the simple truth is that there is very little that is simple about the dental benefit marketplace.

Let’s look at why CDA sponsored legislation around this topic.

CDA had noticed that dental plans were beginning to dictate fees to contracted dentists for procedures that the policy did not cover. In response, CDA proposed legislation, Assembly Bill 2275, to ban a dental plan from placing a fee cap on services the policy did not cover. The law took effect in January 2011, allowing dentists to charge patients their usual fee for noncovered services, which are the fees that a dental practice would charge a patient who has no coverage.

As with most complex situations, it helps to dissect an issue one layer at a time. The first layer around this issue concerns the definition of a “covered service.” Legislation defined a covered service as a plan’s responsibility to pay according to an enrollee’s policy. As a result, a noncovered service is defined as a service that a policy would never cover.

To explore this further, there are times when a plan covers a service but does not make a payment for the service due to policy limitation, e.g., maximum, frequency limitation and waiting periods. A common example of this would be when the patient has exceeded their maximum. In other words, the policy covers the service, but no payment can be made because there are no funds available to pay for the service. The law enacted with the legislation states that “contractual limitations such as deductibles, copayments, coinsurance, waiting periods, annual or lifetime maximums, frequency limitations, or alternative benefit payments” applied to a service do not qualify that service as noncovered.

Further confusion arises when a plan applies an alternative benefit during claim processing. Here is an example: The policy does not cover a porcelain/ceramic crown D2740 on posterior teeth. However, during processing of the claim, an alternative benefit is applied, paying off the fee for a porcelain fused to high noble metal crown D2750. You might be thinking that because D2740 is not a covered benefit, the plan cannot cap the fee, but in fact the law does allow for fee capping in these cases. The law looks at it like this: The policy covered a crown — it just covered it at the porcelain fused to high noble metal fee. In addition, if a dentist is in contract with a plan and the contract/policy of the plan states that a contracted dentist cannot bill above their contracted rate of the D2740 when an alternative benefit has been applied, the dentist is bound by this agreement and cannot bill above their contracted fee for the D2740.

A third scenario that causes confusion is when a plan fee caps a service that the policy does not cover. You may be saying to yourself, “Wait a minute, we just learned that if a policy does not cover the service, they cannot apply a fee cap. Right?” Again, I wish it were that simple. But the law we’ve been discussing is a California state law, yet many groups in the dental marketplace are self-funded and self-funded groups are not required to follow state law as they are federally regulated. With self-funded groups, the employer that provides dental benefits to its employees does so using its own funds.

Self-funded dental policies are typically administered by well-known commercial dental plans, but they are not policies purchased in the market. Here’s how this type of policy can impact claim processing. Let’s say the office submits a claim to a well-known dental plan. The plan then sends an explanation of benefits and payment to the office. While reviewing the EOB, the office notices that the plan placed a cap on what the dentist may charge the patient for a service the policy does not cover. This is usually when the office calls CDA Practice Support for help, as they are sure the plan is violating California law. During the call, we determine that the group is a self-funded group and that they are therefore not violating California’s noncovered benefit law.

Remember that the law on capping fees for noncovered services is in California state law, so it does not apply to federally regulated policies. One way to find out if the employer is funding its own policy is to search for the employer using the FreeERISA website, freeerisa.benefitspro.com (free registration required). If the employer shows up in the search results, it is self-funded.

For CDA Practice Support resources related to dental benefit plans visit our Resource Library or call 800.232.7645 to speak with a practice analyst.

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Updated on Tue, 19 Nov 2019 by Yesenia Gutierrez