Answers to your insurance questions

Sept. 1, 2002
HMOs, PPOs, EOBs - learning the acronyms is just the start! The hard part is dealing with the paperwork and patient questions. Here's a Q&A tutorial for you.

by Carol D. Tekavec, RDH

HMOs, PPOs, EOBs - learning the acronyms is just the start! The hard part is dealing with the paperwork and patient questions. Here's a Q&A tutorial for you.

Dealing with insurance carriers creates many problems for dental offices. Problems with Explanation or Estimate of Benefits (EOB) form language, post-payment utilization review, and payment delays are only a few of the issues offices deal with on a daily basis. Staff members frequently have the same types of problems, regardless of where an office is located geographically. What follows are answers to some common questions I receive from dentists and their staffs.

Q: Why do patients receive EOBs a week before the dental office does?

A: Technically there is no official reason patients should receive an EOB before the dental office receives its copy; however, many do. Usually, the problem is not that patients receive the EOB first, but that the EOB contains negative statements or denials. Rather than address the problem after the fact, let patients know during their pretreatment conferences that an EOB will be forthcoming and it will likely deny a portion of their treatment. Tell them that the EOBs they receive may contain statements such as, "the dentist's fees are above the usual and customary for the area." When patients are forewarned about the EOB and what it might contain, the effect is seldom as negative as waiting until after the fact.

Q: How do carriers come up with "usual and customary" fees?

A: Insurance plans typically base their fees on one of two systems: "charging patterns' or "relative-value scales." Charging patterns usually are based on a data pool of charges for each section of the country. Relative-value scales are based on studies of what goes into each type of dental procedure. The exact method used by each insurance carrier and the actual fees and "percentiles" set for each plan are considered to be trade secrets and are not revealed to patients or dentists.

When the "charging patterns" method is used, a data pool of charges is set up by zip code on a table that shows an average charge per treatment code, and eight different percentile levels of payment. These percentile levels are reported as the 20th through the 90th percentile. An insurance carrier presents several percentile levels and related premium payment amounts to employers buying the plans. Whatever percentile is selected by the employer becomes the set fee schedule or "UCR" fee schedule for that plan. The term "UCR" might more accurately be called a "negotiated fee." UCR is simply what is considered the accepted fee for each particular plan, as negotiated between the employer purchasing the plan and the insurance carrier providing the plan.

Q: Why do carriers deny a claim, particularly an electronic claim?

A: Carriers deny claims based on the parameters of a patient's contract. If a service is not covered in the contract, it will not be a benefit, regardless of dental or medical need and regardless of its format.

Q: What can I tell patients who tell me that their plans cover exams and certain other procedures at 100 percent?

A: Tell them that the "100 percent," as defined by the insurance carrier, is actually just what the insurance carrier "allows" as its 100 percent or full payment toward a procedure. It bears no relationship to what your office may actually charge. For example, your office may charge $80 for an exam. The patient's carrier may allow $60 as its 100 percent payment for that examination, leaving $20 for the patient to pay.

Q: Can patients obtain a list of codes and a carrier's allowed benefits for each code?

A: Theoretically, this should be allowed under federal labor law for plans covered by ERISA. (ERISA stands for the Employment Income Security Act of 1974, which was put in place to protect employee pensions and company self-funded plans from "excessive" state regulation.) In fact, in 1996, a federal Labor Department "advisory opinion" stated that "usual and customary" fee schedules used to determine insurance benefits for companies falling under the ERISA Act are "instruments under which the plans are established or operated" and must be given to participants of the plans when requested in writing. However, few, if any, patients have ever obtained this information. Carriers regard the allowed amounts as trade secrets and will not reveal them.

Q: Can offices obtain the allowed amounts and inform patients?

A: No. It is possible to purchase a general-fee profile, known as the Prevailing Healthcare Charges System. It is commonly used by carriers to determine fees by code for each zip code area in the country. This fee profile system is extremely expensive and the information is not specific for each plan.

Q: Why do carriers refuse payment for panographs and other X-rays when taken the same day?

A: More than 10 years ago, many carriers eliminated payment for a full-mouth series of radiographs and a panograph when taken on the same day - or even within the same three year period. (Most carriers consider seven periapicals as a full-mouth series, despite the fact that most dental personnel consider this to be 14-18 films.) Some carriers now are eliminating payment for any PA's taken on the same date as a panograph.

Q: Why do some insurance rules go against proper dental procedures and services?

A: Most carriers employ attorneys who help set up the plans. They are careful not to put in any parameters that cannot be supported by some type of defensive "evidence," such as dental articles from recognized refereed journals and parameters from recognized dental groups, such as the ADA and the AAP. Remember, plan parameters, or "rules" are designed to sell plans and/or make money, not fully fund the most appropriate treatment.

Q: Why do carriers stall 30-60 days or more on claim payment?

A: Turn-around times on paper claims are slow. E-claims are better, so use the electronic format whenever possible. Set up a written policy for the office that explains what your office will do to help patients obtain their benefits. (Call (800) 548-2164 for a complimentary sample of a written office policy.) Give your patient a copy of your policy in a friendly way before any problems crop up, so patients know what to expect. If the patient's plan does not pay during the time you have stated in your policy, give the problem to the patient to solve. Print out the unpaid claim, put the unpaid portion on the patient's balance if you have not already done so, and tell the patient to file on his or her own behalf.

Q: How can an office file a complaint with the insurance commissioner?

A: State insurance commissioners are given the task of protecting the consumer, not the dentist. However, if a certain company has many complaints, it might affect their ability to continue business in a state. A patient letter, email, or a letter from an employer usually pulls more weight.

Most state insurance commissioners have Web sites for obtaining addresses, phone numbers, and email addresses.

Q: Why is the "write-off" so high in a PPO?

A: Third parties attract subscribers to plans that have low premiums and/or low co-payments. The carrier makes money on the subscribers, so the more subscribers, the better for them. For the dentist, excessive write-offs can be economic suicide. Each potential PPO contract should be carefully evaluated to be sure that the plan doesn't ask for more than a 20 percent discount on the dentist's normal fees. It also is a good idea, if possible, to limit PPO involvement to no more than 20 percent of the patients in your practice.

Q: How can an office terminate a PPO contract?

A: Typically, a PPO contract can be terminated by either the PPO or the dentist with a 30-day notice. Before terminating a PPO:

  1. Determine exactly how much of a discount the office is giving to each plan with which it has an agreement. Try to eliminate plans that require more than a 20 percent discount before plans that pay more generous benefits.
  2. Notify patients under the plans that you are going to be dropping of your decision to end your participation. This can be done by mail and should be done at least 30 days before you actually terminate the plan. Carefully word this letter, eliminating any reference to "this plan doesn't pay enough." Keep the wording simple, and stress that the "plan was too restrictive."

Q: An insurance carrier that many of my patients are with says that after ordering a utilization review of my patients, it appears that money has been billed and paid incorrectly to me. I have a contract with this plan, and now they say I owe them thousands of dollars! What can I do?

A: If a plan collects utilization information that indicates a dentist is performing more of a certain procedure than other dentists in the same area, the insurer may demand repayment. The rationale typically stated by the insurer is that the dentist billed the procedures incorrectly. Detailed records are the only defense. If records are unclear on diagnoses, treatment-planning, codes, and progress notes, the dentist typically has no recourse. Billing procedures must match progress notes. With complete records, the dentist can challenge the carrier legally.

Status of ADA Class Action Suit Against Aetna

Q: I have heard that the American Dental Association is suing an insurance carrier for benefit problems. What are the problems and what is the status of the case?

A: The ADA and two dentists filed a class-action lawsuit against Aetna Inc. in August of 2001. There are three parts to the suit:

•Under the terms of Aetna's contract with patients, out-of-network dentists are to be paid according to actual charges, not lower UCR fees. Aetna has been paying out lower benefits based on what the ADA says is faulty "UCR" data. The ADA contends that this is a breach of contract.

•Aetna's out-of-network EOB statements imply that dentists are overcharging their patients. The ADA contends this is libel.

•By implying that out-of-network dentists are charging too much, Aetna has interfered with the dentist-patient relationship and injured prospective future business for dentists. The ADA contends this is "tortious interference."

Recently Aetna's attorneys were able to get the suit transferred from the Illinois court to a Florida federal court. It remains to be seen what effect, if any, this will have on the proceedings.

A similar suit has been filed by the ADA against Wellpoint.

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