01/03/2019

In-office discount plans: Legal requirements and other considerations


In a dental economy dominated by PPOs, dentists are looking for ways to encourage patients, particularly those with limited coverage or no coverage at all, to seek the care they need. According to the ADA, access to dental insurance is the No. 1 predictor of a dental visit due to the patient’s ability to offset their out-of-pocket expense for oral health care. For those without some form of dental benefit or insurance, routine dental care often falls to the bottom of the priority list. In 2017, 114 million people in the U.S. had no dental coverage, compared to an estimated 28 million who lacked medical coverage. In California, approximately 13 percent (nearly 5 million) of Californians are without dental coverage. 

One approach generating interest is the establishment of an in-house discount or membership plan to both attract and retain the uninsured dental-patient base. Prior to offering a discount or membership plan to patients in your practice, it is imperative to understand the regulatory and legal requirements.

Regulations

The California Department of Managed Health Care has authority to regulate discount health plans in California.

As a consumer-focused agency, the DMHC is concerned about how discount health plans are marketed, specifically that they are not marketed to suggest they are risk-bearing insurance products. In discount plans, the patient bears the risk. No claims are submitted for treatment because the plan pays nothing — but the patient does experience a savings on care.

DMHC is also concerned that a discount health plan’s network of providers is authentic, meaning that the plan has some sort of agreement with its network of providers to notify subscribers of discounted care available through those providers. Usually the “network” is only your office, meaning the discounts do not apply anywhere else. The department also wants to ensure the advertised discounts are actual discounts — that if a discount health plan is claiming that a patient can save, for example, 15 percent on the cost of care, he or she is actually experiencing a 15 percent 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 Health Care Service Plan 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 any such discount designs that a practice may have, just to make sure.

The department has asked that any dentist who wishes to establish a discount payment arrangement for patients contact the agency prior to offering a discount plan or membership:

Office of Legal Services
California Department of Managed Health Care
980 Ninth Street, Suite 500
Sacramento, CA 95814
www.dmhc.ca.gov/AbouttheDMHC/Contactus

Once a discount plan is established, dentists should note that certain information must be made available to inform patients, or prospective patients, as stated in Section 1051 of the Dental Practice Act, including the following:

  • The length of time, if any, the discount will be honored
  • Verifiable fees pursuant to Section 651 of the Business and Professions Code
  • Specific groups that qualify for the discount or any other terms and conditions or restrictions for qualifying for the discount

Also, an advertisement of a discount must list the dollar amount of the nondiscounted fee for the service and list either the dollar amount of the discount fee or the percentage of the discount for the specific service.

Plan details

Once you observe the legal and regulatory requirements of starting an in-office discount plan, you will next want to consider plan options and pricing and how to effectively market your plan.

Options for discount plans vary widely, but they frequently include preventive care, i.e., two cleanings, two exams and an annual set of X-rays, with a discount off UCR fees for all other treatment. The discount may be set at the discretion of the dentist, but is usually a 10 to15 percent reduction off UCR. I have also seen practices incorporate a second tier plan for those patients who are on maintenance and required to visit the practice more than twice per year.

The plan fees are determined by the practice and are generally paid annually, providing an incentive for patients to keep their preventive visits because they have already paid for the services. Additional family members are commonly added to the plan at a lesser fee.

Pricing

The impetus for offering a discount plan is to ensure patients receive needed oral health care at a reasonable fee. However, it also needs to make economic sense for the practice. Given the variance and diversity in fees and community demographics, each dentist has to make an individual decision as to what they will charge for their discount plan. One way to develop the plan pricing is to add all of the fees of the covered preventive services and decide on a percentage reduction of this total amount.

Marketing

Once you have established your plan and it has been reviewed and approved by the DMHC, it can be an effective marketing tool. Consider promoting the plan on your website, on social media and even in print ads and mailers, as all forms of promotion can attract those patients looking for more accessible and lower-cost care in your area. I always advise working with a marketing professional to determine the best way to connect with a specific community. (WEO Media is a CDA Endorsed Program that can help members with dental marketing campaigns.)

Because many dental benefit plans do not allow contracted dentists to offer discounts on the agreed-upon fee schedule, it is recommended to offer the discount plan to those without insurance benefits only. Ensure that this is clearly stated on any marketing materials.

If you have questions about setting up a discount plan in your practice or about the DMHC review process, contact CDA Practice Analyst Lee Bentz.

This article was authored by CDA Practice Analyst Lee Bentz and originally appeared in the December Update.



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