How to bill for noncovered procedures

Inquiries to CDA Practice Support about dental benefits seem to run in cycles. Recently, Practice Support has received questions about whether the dental plans that dentists are contracted with can dictate fees for treatment on procedures that the plans don’t cover. In these cases, what should the dentist charge the patient?

The answer can be found in CDA-sponsored legislation that became effective in 2011.

CDA had noticed that dental plans were increasingly dictating fees to contracted dentists for procedures that plans didn’t actually cover. This amounted to plans dictating a price in the marketplace where the plans themselves had no economic interest. CDA sponsored legislation in 2010 that prohibited a dental plan from placing fee caps on services the plan itself didn’t pay for. The enacted law allows dentists to charge patients their customary fees for those noncovered services, which are basically the fees that a dental practice would charge a patient who has no coverage.

That’s the simple answer: A plan cannot dictate the price for services that are not part of its scope of benefits.

But there are nuances that dentists should be aware of. First, what is considered a “covered benefit” or service for which a plan may impose a capped fee? The legislation defines covered services to mean procedures for which a plan is obligated to pay pursuant to an enrollee’s plan contract. Therefore, a noncovered service is one that a plan does not cover and never pays for.

There are times when a plan covers but does not pay for a service — for example, when a patient has exceeded his or her annual maximum with the plan, or a provided dental service bumps up against a time limitation, such as when a crown needs replacement but is within the period that a plan has determined should be the life of the original crown. Nonpayment by a plan when a patient has reached the annual maximum, or when a stated limitation or exclusion applies to a service when that service would have ordinarily been paid for, is not considered a noncovered service, even when the plan does not pay for that service because of a maximum or limitation. A plan can only dictate a fee for convered services, even in circumstances when the patient is fully responsible to pay for the service out-of-pocket.

Another situation that creates confusion is when a plan applies an alternative benefit to a procedure. For example, a plan may not have a fee for a composite restoration, but pays the fee it has for an amalgam restoration when a composite filling is provided. It has been argued that the composite restoration is not a covered service because it pays at the amalgam rate. Actually, composite fillings are covered — they are just covered at the amalgam filling fee. A claim submitted to a plan for a composite filling is paid; it’s just paid at the amalgam rate, usually with the ability of the dentist to bill the patient the balance between what the plan paid and what the dentist’s customary fee is for a composite restoration. If a composite filling were a true noncovered benefit, the dental plan would not pay anything for the service. Again, a “noncovered service” is one that a plan does not cover, and never pays for.

The law enacted with the CDA 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 does not qualify that service as noncovered.

Self-funded plans

A third scenario that causes confusion occurs when the cap is applied to a service the plan does not cover and the plan is self-funded.

Self-funded plans are a large part of the benefits market. Self-funded dental plans are typically established by large employers, government employers, unions and businesses that have operations in more than one state. Such plans are typically administered by commercial dental plans, but they are not commercial coverages purchased in the market. A dental office will submit a claim to a well-known dental plan, and the payment and explanation of benefits look like the claim was paid by the plan, but the explanation of benefits may indicate that a claimed service wasn’t paid because it was a noncovered service. Consequently, the plan places a cap on what the dentist may charge the patient for that service.

Unless the plan has made a mistake (which is unlikely, but possible), the plan is self-funded and is not violating California’s noncovered benefit law. Self-funded health plans operate under federal law, which exempts such plans from the provision of state law. As the prohibition on capping fees for noncovered services is in state law, it only applies to dental plans that are either licensed by the State Department of Managed Health Care, or certified by the State Department of Insurance.

When an office receives an EOB on a claim payment that limits what a dentist can charge for a noncovered benefit, the office should look into whether the plan is actually self-funded. If the employer group is a division of government, a union or a large group, it is likely self-funded. A way to find out for sure is to do a search for the employer on the FreeERISA website. If the employer shows up in the search results, it is a self-funded group to which the state prohibition on capping fees for noncovered services does not apply.

Customary fees, discounts

When billing patients for services that their plan does not cover and did not pay, it is important to consider whether the dental office desires to extend to the patient a discount on their customary fees. Under state law, dentists cannot charge a patient more than their usual and customary rate for services provided, but the dentist may charge a patient a discounted rate, if he or she is willing, considering that the patient is now obligated to pay for the service out-of-pocket.

CDA always advises dentists to use their usual and customary fees when filling out claims (this tells dental plans what the going rate for dental services is in a given area), so the claim should reflect usual and customary fees. But, if the plan does not pay because the claim is for a noncovered service, the office may extend a discount on the service to the patient. Again, this applies to a service that is truly a noncovered benefit, not a service to which an annual maximum or a limitation applies.

In summary, California law was changed in 2011 to prohibit dental plans from capping fees that a dentist may charge a patient for a service that plans don’t cover and consequently never pay for. There are situations to which this prohibition does not apply: when nonpayment occurs because the patient has exceeded his or her annual benefit maximum with the plan or when a time limitation applies to the service; and when the capped fee comes from a self-funded dental plan to which state law doesn’t apply.

For further discussion of noncovered benefits, see the CDA resource Noncovered Services Questions and Answers (with Sample Letter), available at cda.org/resources.

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