Part 4 and conclusion:"The Discount Plan; the final solution”

Well the ultimate way for insurance companies to insure predictable profits and is to eliminate paying out anything. Well this was finally figured out, but not by insurance companies initially.

            The year was 1993, a very astute businessman saw an opportunity to start a business with very little risk, minimal investment and potential lucrative profits. The idea was this; sell a dental insurance plan to people that would give them reduced fees. Dentists would be recruited who, in exchange for patients, would agree to reduce their fees to the amounts created by the discount dental plan (let’s call it DDP for now).  DDP would then sell their plan while providing a list of the dentist who agreed to accept these fees. That is it. Simple. Brilliant. DDP would collect money for the sale of their “insurance plans” and it was nothing more than a list of dentists and a fee schedule.

            To increase profits, a low-cost way of selling plans was devised. Following the pathway of great companies such as Avon, Mary Kay etc… they employed the business model of Direct Sales. In this case, people who purchased the dental plan would then get a kick back for every plan they would sell. This is a cost cutting way to increase sales while spending very little in the way of advertising or employing actual sales people. Unfortunately for DDP, this backfired, as the pyramid direct sales route ended up with a patient purchasing the plan and then selling the plan to other patients at their dentist’s office. The dentist realized that by participating in these plans, they were not getting new patients but rather having their patient base converted to DDP patients and thus the lowered fees were not being offset by increased patient volume. For the moment, the discount dental plan was rarely seen.

            Years later with increasing health care costs and an economy reeling from various causes the discount dental plans rose from the ashes. This time it was organized into a legitimate style of business with resources to advertise their plans to the underserved population and in turn, the DDPs flourished. With more dentists competing for patients in the poor economy they signed up in droves. At first, the “real” insurance companies objected as they felt threatened by these companies. In fact, the DDPs were made to drop any reference to “dental insurance” and only advertise as “discounted dental plans”.

            After some time the insurance took on the philosophy: “If you can’t beat ‘em join ‘em”. They realized that this model made the most sense from a profitability stand point and as of this writing most dental insurance companies now offer some form of a discount dental plan.   

Conclusion

            There have definitely been some ups and downs between the dental profession and dental insurance. However, a significant consideration is that people who have dental insurance tend to see their dentists more regularly.

            The preventative aspects of dentistry are well documented and if we can help patients when issues are detected and treated early this will improve oral health and keep costs down.

            So many times I am saddened when patients delay coming into the office and then return with large expensive problems only to hear them say I didn’t come in because I don’t have insurance. Of course I am aware of the ever increasing costs of health care, dentistry being no exception, but how dentistry and medical fees skyrocketed over the last few decades is for another time. But    fillings (which aren’t cheap) are nowhere near the costs for root canals, crowns or implants if the tooth can’t be saved.

            I went into dentistry to help people have healthy and beautiful teeth. Believe me, I would much rather focus on cosmetics and comprehensive care for patients who weren’t fortunate enough to have genetically beautiful teeth or patients who had trauma resulting in tooth loss or injury. Being a vulture preying on patients who need expensive care because they couldn’t afford routine or preventive care is not what motivates me. So, any improvement in our system that allows doctors to focus on unavoidable conditions or treatments that improves the quality of people’s lives is what we, as doctors, strive towards.

As a society, we have tended to look toward progress in the form of technology to cure all that ails, and it easy to see why. Advancements such as Penicillin, computers, vaccines, etc…. have touched and improved all our lives as a matter of fact. However, future solutions especially in the healthcare field must dealt with by using our intellect, common sense, and morality to navigate us through the world of technology, economics, and modern lifestyles that we are faced with now.

Part 3- Health Management Organizations (HMO) or in Dentistry Dental Management Organization (DMO)

For the insurance executives, the level of risk, even in the highly controlled preferred provider or in network plans was too high. The actuaries in charge of analyzing statistics and determining the precise formulas to ensure predictable profits were unable to account for the variability of the dentists constantly evolving with new plans and rules to “beat the system”.

            The newest and ultimate idea in managing costs for a dental insurer would require even more control of the doctor-patient relationship. For the purposes of this article I will speak on dental HMO’s which behave similar to medical but have some unique qualities.

            One of the first DMO’s I ran across came to me when I was just starting my practice about 18 years ago via a slick salesman telling a young dentist everything he wanted to hear. “If you join this plan, you will have more patients than you could ever attract by word of mouth or traditional marketing. And you can focus on doing what you are trained to do- provide quality dentistry and not run a business!” Where do I sign?

            Well he was right about one thing I suddenly had a lot of patients. The catch: I could not perform quality dentistry and I was doing less dentistry and more paperwork and spending my time calling and writing letters to the insurance company to get treatment approved or payment for work that I had done.

            Here’s how it works. The dentist sign up for the DMO and his name goes on a list.  An employee whose boss buys the plan gets to select a dentist from the list. Once the employee selects the dentist they agree to see that dentist and from that day the dentist will get a dollar value per month for every patient he has on his roster. Not bad, but the monthly amount for each patient is very small, in this case it was $8 per month. Now when the patient would come to the office for a cleaning, check up and x-rays there was no copayment and no fee. If the patient never comes in then the dentist would get $8 per month regardless of the fact he never saw the patient, so at the end of the year you could make $96 from that patient.

            So everything goes well if the patient doesn’t actually want or need to come to the dentist. Let’s say though a patient wants to use their new dental insurance and actually get some treatment done. The patient goes in gets their cleaning and checkup and they have some cavities. The dentist tells them to come back and we will take care of the fillings at the next visit.

            As part of the DMO the dentist is not allowed to charge for any fillings, as these too are part of the covered treatment for the $8 per month. Once again human nature creeps into the picture. An ethical dentist (Dr. Do Good) made an agreement and must fulfill it, and now must suck it up and do the fillings and accept the fact that he won’t be making any profit on this patient. But the reality is - to do a cleaning, x-rays, exam, and fillings for $96 (not to mention the other potential times the patient comes in that year) will eventually bankrupt any dentist “doing the right thing”. So the dentist must he either get out of the plan or “modify” the way he does dentistry and become a different kind of dentist.

            So here comes the dentist (Dr. DMO) who can work the system. The same scenario as above, but Dr. DMO knows he can’t get any money for simple fillings. So he tells the patient they need crowns on those teeth with cavities, because he will get reimbursed for crowns from the insurance company and there is a co-payment he can collect for crowns as well. Now Dr. DMO gets his $96 per year and fees for crown. The fee for the crown is no great shakes, but Dr DMO will use an inexpensive lab and he will have to efficiently (quickly) get the treatment done.

            And the game is back on. But this time the insurance company is out of the game. The game is now between the dentist and the patient. The insurance company knows it will have to pay more for a crown, but with a large co-payment attached to crowns they know (from years of analyzing statistics as said before) many people will not have the crown treatment done if they have a co-payment to pay, hence the reason for the co-payment in the first place.

            The insurance company also is fully aware of what is going on with the dentist and patient and, accept for an occasional letter to patient and doctors warning them of the dangers of insurance fraud, they mainly turn a blind eye. Why? Because if they really enforced the insurance fraud aspect in respect to protecting patients and creating increased costs, there would be no doctors left in their plans. They allow this to go on as a cost of staying in business. For the most part, they are outside the game and their profit margins are very predictable in these plans. Unfortunately, the mentality is: if a dentist is not treating a patient correctly then let the patient worry about that and, on top of that, if a dentist can get a few extra bucks out of the patients pocket but stay in their plan it’s a win-win for the insurance company.

            So why would a quality minded dentist join a DMO, well they wouldn’t, or if they did, they would be out quickly. So if you go to a DMO clinic are you in trouble. Maybe, or you get a young dentist (Dr. New) working his first job out of school and Dr. New is still trying to do the right thing. Eventually, Dr. New will find a better practice where he can practice dentist the way he was trained or, Dr. New will become the next Dr. DMO on the block.

Next week- the latest craze “The Discount Plan”