Managed Care: Dentistry June 25, 23 PRACTICE OF DENTISTRY (BUSINESS ASPECT) VS. Overview of Benefit Issues PRACTICING DENTISTRY (PROFESSIONAL ASPECT) Changes in the Delivery of Dental Benefits Indemnity Hybrids HMO Loss of control FEE-FOR-SERVICE THE DENTIST RECEIVES A FEE FOR EACH SERVICE THE DENTIST IS NOT AT RISK MANAGED DENTAL CARE: attempts to manage the cost and quality of dental care through the use of various delivery systems and reimbursement models PREFERRED PROVIDER ORGANIZATION A dental plan with a network of dentists who have agreed to accept a specific fees for covered services Reimbursement is on a fee-for -service basis THE DENTIST IS NOT AT RISK 1
DENTAL HMO CAPITATION/PREPAID A dental plan that reimburses the dentists on a fixed per capita basis, usually monthly for each individual or family Payment is made irrespective of the number of services rendered or beneficiaries seen THE DENTIST IS AT RISK Millions The Dental Marketplace - Delivery Models Dental managed care Current Dental Enrollment by Plan member growth - 1994-1999* Type* *Source: National Association of Dental Plans, 2. 1 9 8 7 6 5 4 3 2 1 6 1.8 17.1 7 15.7 8.6 24.8 9.4 29.2 1.4 12 39.5 47.7 19.8 24.7 27.2 28 27.4 1994 1995 1996 1997 1998 1999 Referral Networks 43% 8% 18% Referral Indemnity 31% Trends in Dental Care Nearly 6% of covered employees are currently enrolled in managed dental programs. Ds are growing rapidly (>3% annually) Growth in managed dental enrollment helped to control employers overall dental cost increase to 5% in 1999. 6, 5, 4, 3, 2, 1, Dental Vendors Participating dentists by major D vendor 55, 51, 35, 48, 33, Aetna* CIGNA* Delta MetLife* United Concordia 18, 16, 14, 12, 1, 8, 6, 4, 2, Major Vendors 17, Dentists usually participate in several Ds. Most dentists participate in only one. *Has national capabilities 16, 6, Aetna* CIGNA* Delta Dental Vendors - Market Share Participation in dental plans (employees and dependents) Total dental benefits market - 2 153million Dental Care in Traditional and Managed Plans In millions 45 4 35 3 25 2 15 1 5 15 18 14.8 Aetna BC/BS (all plans) CIGNA Delta (all plans) 35 42.2 17.5 6.3 6 Metlife United Concordia Wellpoint All Others Cost Quality (or appropriate care) 2
Dental Care in Traditional & Managed Plans No valid or reliable studies currently exist which indicate that there is a variance in quality between traditional and managed care dental programs The limited studies available indicate there is no distinction between the care delivered under dental benefit programs with differing financial incentives for dentists (E.G., Massachusetts Employees Study, Washington Delta Study) Dental Marketplace Data Surveys of more than 34, private firms in 1993 and 21, private firms in 1997 showed that more employees were receiving dental benefits coverage through their employers, not fewer as had been expected. In 1993, said the Rand researchers, 59% of workers with health benefits also had dental benefits. The number climbed to 65% by 1997. Managed Dental Care February, 2 mal 6% Dental Benefits Enrollment by Employer Type - Full-Time Employees* Percentage of Full-Time Employees by Size of Company Percentage of Employees That Have Dental Benefits Mid-Siz 9% 8% 28% 7% 6% 5% 4% 3% Large 2% 1% 12% % 87% 55% 35% Large Mid-Size Small Dentist Income 75% of dentists professional income is derived from 1/3 of population with employee dental benefit *Large employers are defined as 3, covered lives or bigger. Mid-Sized employers are 3 to 3, lives. Small employers are under 3 lives Myth #1 That dentistry has held the line re: costs Changes in the Dental Marketplace 1998 Consumer Price Index - Increases in selected Items 5.% 4.5% 4.% 3.5% 3.% 2.5% 2.% 1.5% 4.4% 3.2% 3.3% 4.9% 2.6% 1.6% 1.%.5%.4%.% Dental Services Physician Services Professional Services Prescription Drugs & Medical Supplies All services All Items (All All Commodities Goods & Services) Source: U.S. Department of Labor, Bureau of Labor Statistics 1999 3
The Dental Marketplace - Financial Overview Trend rates Traditional indemnity 7% - 1% - Many plans in excess of 1% D 4% - 7% 2% - 4% No abatement in trend increases is expected Changes in the Dental Marketplace Projected Spending on Dental Services 1999-28 ($ in billions) $1. $9. $8. $7. $6. $5. $4. $3. $2. $1. $. $88.2 $93.1 $83.7 $79.3 $71.5 $75.3 $67.7 $63.9 $56.6 $6.2 1999 2 21 22 23 24 25 26 27 28 Source: U.S. HealthCare Financing Administration, Office of the Actuary, 1999 Dental Providers Dentists per 1, U.S. Residents 62 6 58 56 54 52 5 48 2 22 Projected Dental Providers US Dentists in Private Practice- 2 2, 1, Specialists General Dentists Effect of Managed Care on Dentists Net Income (responses among managed care participant dentists) 26.7% 4.1% 25.5% 39.6% The Changing Face of the Marketplace: is Managed Care Right for You? 33.2% 34.9% Net income increase No change Net income decrease Source: American Dental Association, Survey Center, 1998 Survey of Capitation and Preferred Provider Dental Plans, March 2 4
RISK! FINANCIAL ADMINISTRATIVE LEGAL INDEPENDENCE RISK EXTENT/DEGREE OF RISK EXPOSURE CAN RISK BE MANAGED OR MINIMIZED WHAT ARE POTENTIAL BENEFITS CHANGING DENTISTS MIND- SETS THINK IN TERMS OF HOURLY INCOME, NOT FEE FOR A SPECIFIC SERVICE ANALYZE INCOME FOR TREATING A POPULATION OF PEOPLE, NOT AS INCOME FROM EACH PATIENT THEY ARE NOT ALL ALIKE Robert Mehlman D.D.S. In reality, there are good programs available and there are programs that are not beneficial for the average dental practice. In any given part of the country, the quality of dental health plan programs can vary dramatically. KEY REAL WORLD FACTORS IN CHOOSING A MANAGED CARE PROGRAM RECOMMENDATION OF A CURRENT PROGRAM PARTICIPANT WHOSE OPINION YOU TRUST WHAT IS THE REPUTATION AND STAYING POWER OF THE PROGRAM? IN CAPITATION (), WHAT IS THE PER MEMBER PER MONTH PROVIDER COMPENSATION? IN A PREFERRED PROVIDER PROGRAM (D), WHAT IS THE SCHEDULE OF MAXIMUM ALLOWABLE CHARGES COMPARED TO MY USUAL FEES? EXACTLY, WHICH SERVICES ARE COVERED BY THE PROGRAM? KEY REAL WORLD FACTORS IN CHOOSING A MANAGED CARE PROGRAM CAN PROVIDERS CHARGE THEIR USUAL AND CUSTOMARY FEES FOR NON- COVERED SERVICES? IF NOT, WHAT ARE THE RESTRICTIONS? INA, WHICH SERVICES REQUIRE A COPAYMENT AND WHAT IS THE COPAYMENT AMOUNT? HOW IS SPECIALTY CARE HANDLED? WHAT IS THE TERMINATION PROCEDURE (FOR MYSELF; FOR THE PROGRAM)? 5