The main cost contributor is a high rate of utilization; more employees and their families are going to the dentist more often. Also driving the cost increases are the marketing efforts of dentists, which have led to a greater demand for whiter teeth and a cosmetically pleasing smile.
So why aren’t employers taking action? When it comes to assessing liability, most employers readily see the need to manage drug plan costs to protect themselves from catastrophically expensive drug claims. But few see the same need to manage dental plan costs, feeling their exposure is limited. Are they aware that strategies are available that can contain these increases?
Although dental plan cost increases may parallel overall health plan trends, there are important differences in how the dental plan is viewed by both employees and employers. Whereas health benefits are more often seen as insurance, triggered in reaction to a health incident, dental coverage is viewed as a benefit used primarily for diagnosis and prevention. From the employer’s perspective, dental plans have broader impact, in addition to more equitable distribution of costs, as more employees benefit from use of the plan.
This may explain why employers are more reluctant to reduce dental plan provisions than other health plan benefits, despite the rate of cost increase experienced in the last couple of years. Employers feel they must offer dental benefits as a human resource strategy to attract and retain employees. As most employees enjoy the use of dental benefits, they are a greater employee ‘satisfier’ than some of the other health and disability benefits that healthy employees do not expect to use. Conversely, failure to offer a dental plan is a huge ‘dissatisfier’ that could lead to disgruntlement.
THE TREND IN DENTAL PLAN COSTS
Dental coverage has been a common feature of employee benefit plans since the mid 1960s. Many programs were designed to provide 100% reimbursement for preventive, diagnostic and minor restorative services such as fillings. The strategy was intended to encourage employees to practice good oral hygiene and thereby reduce overall dental plan costs over time.
It was a good theory and, some would argue, a good practice as well. In 30 years, we have not seen a decline in the per capita cost of dental services covered under group insurance plans. Instead, even with fluoridated water and fewer cavities, dental costs per capita have increased steadily since the 1970s. The increase in the cost of employersponsored programs now significantly outpaces inflation, according to Statistics Canada.
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The strategy of early plan designs was certainly successful in one regard. According to Mercer’s plan design database, major restorative dental expenses such as crowns, dentures and bridges have decreased. Major restorative work makes up only 14% of total dental expenses under a typical benefit plan in 2004. This compares to 23% of costs in 1993.
Instead, the cost of extractions has gone up as a percentage of overall costs by 35% between 1993 to 2003. This finding is unexpected as dentists prefer to save a tooth whenever possible. Also, with improved hygiene and greater focus on prevention, one might expect extractions to have decreased as a percentage of the overall costs.
Further investigation demonstrates that patients in the 15- to 24-year-old age group incur 42% of extraction expenses. Frequently, extractions at this age are performed on the wisdom teeth. Some may question whether these extractions are necessary in all cases. Could this be an example of preventive practices having gone too far?
Some dental consultants have proposed that group insurance plans cover the extraction of wisdom teeth only when the teeth have associated pain or pathology, such as root resorption in an adjacent tooth or cyst formation. This strategy has been shown to lead to more cost-effective care.
It is curious to note that dental services, unlike many other insured health services, act as the diagnoser, prescriber and provider. The dentist determines what needs to be done, performs the service and is then reimbursed under the healthcare plan. This is significantly different from prescription drugs where the doctor prescribes the service and the pharmacist dispenses.
Over-utilization of benefits is one area dental plan sponsors should be concerned about when managing dental costs. In the future, second opinions may become routine for certain dental procedures where expensive preventive services are proposed.
Another area of concern is the all-too-common practice of treating plan design limits and maximums as minimum service levels. The frequency of dental appointments is just one example. Often routine dental check-ups are scheduled according to the maximum frequency allowed by the plan, rather than by the patient’s condition.
As our working population ages, dental plan costs will continue to rise. And usage of both basic services and major restorative services continue to increase as employees get older. Employers need to consider cost management strategies that will enable them to continue offering comprehensive dental programs in the future. Ideally, the program should balance the extent to which preventive services are useful in providing good oral hygiene and encouraging prevention, while managing the potential for plan over-utilization.
CONTAINING DENTAL PLAN COSTS
Employers can continue to provide quality dental benefits by making simple plan design changes that increase employees’ awareness of dental costs and encourage them to question the services they are receiving:
1. Move recall exams, fluoride treatments and prophylaxis from once every six months to once every nine or 12 months;
2. Add an overall exam limit to reduce substitution of emergency and specific exams for frequency-limited recall exams;
3. Consider reducing the combined limit for scaling and root planning; for example, from 10 units per year to six units per year;
4. Consider eliminating coverage for polishing, or changing the limit from once every six months to every 12 months; and
5. Revise the limit for fluoride treatments from up to twice per calendar year for children, to cover up to twice per calendar year for children and adults at high risk for cavities. Proof of need would be required, such as significant cavity experience in the last year, or radiation therapy to the head or neck.
PREVENTING DENTAL PLAN ABUSE
A more serious area of cost control is the outright abuse of dental plans by a few, less reputable dentists. As the cost of services increases, there is a greater attraction to abusing the system and looking for loop-holes. Examples that have been detected lately include:
• Misrepresenting the type and duration of services provided;
• Charging for services not provided;
• Provision of certain services far outside the typical billing practice norms;
• Inappropriate or lack of qualifications or licensing.
Compounding the abuse problem is the introduction of direct claim submission, through EDI(Electronic Data Interchanges), as well as assignment of benefits. Direct claim submissions give the dental office the ability to submit claims electronically to the insurer. And the assignment of benefits gives patients the option of assigning the payment of their claims directly to the dentist.
These practices have the potential to increase billings as the patient loses sight of what’s being billed to the sponsor. As a result, sponsors need to audit dental treatments and claims to ensure the dentist’s practices are reflective of the dental plan policy.
Dental costs continue to rise above the rate of inflation. For that reason, plan sponsors need to consider new ways to design plans, enforce dental plan restrictions, and draft contracts with plan administrators.
Marg French is a principal, Mercer Human Resource Consulting in Toronto. Marg. French@mercer.com