Non-Covered Dental Services:
How is "Non Covered" Defined?

When trying to provide an accurate estimate of dental benefits, it is critical to pay attention to the unique details and limitations of each patient’s dental plan. It is with the same appreciation for detail that we turn our attention to the legislative battles over non-covered services that have erupted around the country over the past two years. Thus far, 16 states have adopted various forms of non-covered services legislation: Alaska, Arizona, California, Idaho, Iowa, Kansas, Louisiana, Mississippi, Nebraska, North Carolina, Oklahoma, Oregon, Rhode Island, South Dakota, Virginia, and Washington. Twelve more states have non-covered services bills in the pipeline. As of this writing, only one state, Colorado, has failed to pass its proposed non-covered services legislation, and that bill failed with a tie vote. There have been some extremely contentious fights, but to organized dentistry’s credit, the legislative bills that have passed—have passed by a wide margin.

To better understand why this issue is so important to a dental practice, let’s look at what non-covered services legislation involves and what it does for dentists and their practices. The vast majority of dentists in this country participate with one or more dental networks. With few exceptions, it has always been understood that once a dentist participates in a dental network the dentist is obligated to accept that network’s predetermined or negotiated fee schedule as payment in full. The participating dentist is contractually obligated to write off any amount that exceeds the network’s allowable fee schedule, regardless of the amount. With the financial impact of today’s sluggish economy and increasing overhead costs, many dentists have questioned why they should be restricted to network fees for services that are not covered by dental plans.

In the past, some dental networks have allowed participating providers to bill their full fee if a service was not covered by a patient’s dental plan, whereas others have restricted participating dentists to their network fees even when services were not covered. Some plans grandfathered dentists who had older participating provider contracts, allowing them to charge their full fees for non-covered services but restricted newer participating providers to their network fees. In 2008, the Delta Dental Plans Association (DDPA) announced plans to require all Delta Dental participating providers to honor locally approved Delta Dental fees even for non-covered services by January 2011. Up to that point, some Delta Dental carriers had allowed participating providers to charge their full fees for non-covered services, including those services performed after the patient’s maximum benefits had been reached. DDPA’s goal was to standardize Delta Dental contract provisions throughout the country. Although several national dental carriers had been restricting fees for non-covered services for several years, Delta Dental’s announcement was the final straw that prompted several state dental associations to take action and initiate non-covered services legislation.

As previously mentioned, 16 states now have non-covered services laws that prohibit dental carriers from limiting participating providers’ fees for those services that are not covered by the plan. These laws give dentists in those states the right to charge their own fee if the procedure is a non-covered service. Each of the laws adopted thus far mirror one another as to their intent and include language similar to the following:

“No contract between a dental plan of a health care entity and a dentist for the provision of services to patients may require that a dentist provide services to its subscribers at a fee set by the health care entity unless said services are covered services under the applicable subscriber agreement.”

Simply put, if the dental insurance plan does not cover a service, it cannot mandate what the doctor can charge for the service. In theory, that sounds simple. However, as you might expect, the devil is in the details. There are variations in how covered service is defined in each of the state laws adopted to date.

Each state’s statutory definition of what it considers to be a covered service delineates when network fees apply and when they do not. Thus far, Iowa’s legislation is the most favorable to dentists. Iowa’s law states, “Covered services means services reimbursed under the dental plan.” This is subtle, but think about how the term reimbursed differs from reimbursable. Reimbursed,simply defined, means paid for.

According to Mr. Paul O’Connor, Legislative Liaison for the ADA’s Department of State Government Affairs, Iowa interprets “covered services” as those services that are paid rather than those that are payable. In Iowa, if a plan pays nothing for the service provided (even if the plan would have covered the service if the patient had satisfied the waiting period or had not exhausted his/her maximum), the dentist is not restricted to the plan’s fee schedule for that service.

Aside from Iowa, all the other states’ definition of non-covered services are more limiting to dentists. In the other 15 states that have passed non-covered services legislation, services that would have been covered but for plan limitations (i.e., deductibles, copayments, frequency limitations, waiting periods, plan maximum, etc.) are considered to be covered services. That is, if the service is normally covered by the plan under any circumstances, it is a covered service. Some dental carriers (but not all) interpret this to mean that a crown performed for cosmetic reasons rather than restorative reasons is still considered a covered service even though it will not be paid by the dental plan.

Where does organized dentistry stand on the definition of covered service?

The ADA House of Delegates, during the ADA meeting in Orlando in October (2010), adopted Resolution 79H-2010 to address the definition of “covered service.”

The ADA resolution defines “covered service” to be “any service for which reimbursement is actually provided on a given service.” 79H-2010 defines a “non-covered service” as “any service for which the third party provides no reimbursement.” Simply put, if the plan pays nothing for the service, the plan cannot dictate the fee charged for that service. This is similar to Iowa’s interpretation of a covered service.

At the National Conference of Insurance Legislators (NCOIL), which includes legislators who have a vested interest in insurance legislation, the following definition of covered services was adopted on November 21, 2010:

“Covered services means dental care services for which a reimbursement is available under an enrollee’s plan contract, or for which a reimbursement would be available but for the application of contractual limitations such as deductibles, copayments, coinsurance, waiting periods, annual or lifetime maximums, frequency limitations, alternative benefit payments, or any other limitation.”

More simply, if the plan has a provision to cover the service subject to certain criteria and/or contract limitations, it is still considered a covered service. The NCOIL language is consistent with most of the non-covered services legislation that has passed to date in the U.S.

Minimal level of reimbursement loophole

Virginia was one of the most hotly contested battles in the fight for the non-covered services legislation. Representatives from the dental insurance industry spent considerable time, money, and energy trying to defeat the legislation. In the end, the Virginia Dental Association and its member dentists prevailed, and the legislation passed. One might assume the battle is over in Virginia now that the law is on the books. Not so. Although the Virginia law defines “covered service,” it does not address the issue of “level of reimbursement.” As a result, some Virginia-based dental plans now reimburse major services at only five percent (5%).

When there is no restrictive clause in a state’s non-covered services law, a carrier can still control fees by offering only minimal reimbursement. The participating dentist is obligated to accept the plan’s fee schedule for that procedure just as if the plan had covered the service at 100%. Covering services at one to five percent reimbursement essentially converts a conventional dental benefit plan into a discount plan for the dentists who participate. Unfortunately, none of the non-covered services laws adopted to date have included a clause establishing a minimal level of reimbursement to qualify a procedure as a covered service.

What can be done?

Readers whose states have pending legislation for non-covered services are encouraged to contact their state dental association and request the inclusion of a restrictive clause that mandates a minimum level of reimbursement before a carrier can restrict fees. The NCOIL agrees that a plan covering major services at five percent violates the spirit and intent of the law. The NCOIL suggests the following restrictive clause:

“Drafting Note: Concerns exist that dental plans may react by adopting a strategy of covering all services at a nominal or de minimus fee. Such a strategy by dental benefit plans, to adopt or impose a deductible, co-payment, co-insurances or any other requirement in such a way as to provide de minimus reimbursement and avoid the impact of this model bill is contrary to the spirit and intent of this model legislation. States should consider setting a threshold of what payment would constitute; for example, 50 percent of the dentists’ prevailing fee, administered consistently with policies traditionally governing covered services.”

Federal dental programs

It is important to also remember that federal dental plans are typically not subject to state insurance laws. Federal dental plans are governed by federal law. Therefore, if a dental plan covers federal government employees (i.e., FEDVIP plans), dependents of active duty military (i.e., TRICARE), etc., any non-covered services legislation ratified by a state may not apply to those federal dental plans.

When there is no restrictive clause in a state’s non-covered services law, a carrier can still control fees by offering only minimal reimbursement.

Self-funded ERISA dental plans

In addition, self-funded dental plans (which are common with large employer groups and are often managed by insurance companies serving as third-party administrators) are regulated by ERISA (Employee Retirement and Income Security Act of 1996) and are exempt from state insurance laws. The American Dental Association has also proposed an amendment to ERISA that would prohibit self-funded dental plans from dictating fees for procedures that they do not cover.

Convincing Congress to amend ERISA to allow dentists to charge their full fees for non-covered services would be a huge victory for organized dentistry and could be critical to the financial health of dental practices that are struggling to remain financially viable in today’s tough economy and PPO-saturated dental benefits market.