Understanding the Costs of Dental Benefits
February 22, 2016 | Benefits Canada
If employees don’t understand their dental benefits, they may pay unexpectedly out of pocket for their expenses. Worse, they could be vulnerable to fraudulent dental claims that contribute to rising insurance premiums. And with recent statistics showing insurance companies were paying at least $7 billion for Canadians’ dental care annually, employers have an interest in helping their staff become better dental consumers.
Riza Sychangco, a partner at Morneau Shepell, says that with technology, “insurance companies have gotten sophisticated in terms of profiling providers” and will notify consultants and employers when they find fraud. She recalls a profiled dental provider who claimed periodontal treatments for 90% of patients, something she says is highly unlikely and resulted in an audit by the carrier.
More common than fraud, however, are problems with overcharging or plan abuse, says Joan Weir, director of health and dental policy at the Canadian Life and Health Insurance Association.
Sychangco doesn’t remember whether the profiled provider made fraudulent claims or gave patients unnecessary treatments. Regardless, she says employees can avoid problems by becoming better dental consumers.
Total expenditures in 2012 for private dental services:
Amount paid by insurance firms:
Amount paid by households:
Source: Canadian Institute for Health Information
Weir says about 65% to 75% of employees use their dental benefits each year. On average, they have six procedures a year in two visits, says Shawn O’Brien, a vice-president and national leader of the business analytics practice at Aon Hewitt. A typical visit is a recall exam that includes the dental trifecta of an oral exam, scaling and polishing.
“A lot of [benefit use] is diagnostic and preventive,” says O’Brien, noting that studies show regular checkups and scaling result in fewer cavities and other dental work. “It makes sense to do prophylactic work as part of your plan to avoid more costly treatments down the road.”
Mara Notarfonzo, director of HR operations and total rewards at CAA South Central, has seen a similar trend at her company, with the majority of employee dental claims involving preventive work. “What most [employees] want is your standard dental care,” she says.
But how much preventive care do employees need?
Sychangco says studies show one recall exam every 12 months is generally sufficient for oral health. Someone with good oral health habits who receives regular checkups typically requires no more than four units of scaling a year, says Shelly Selinger, senior manager of managed health programs at Co-operators Life Insurance. (A unit is 15 minutes.)
Invoicing for more units could be plan abuse if the patient received them only because the dentist knows the plan covers them.
“By and large, dentists and dental specialists are ethical and they follow best practices, but we do hear of [overcharging],” says O’Brien.
“People have a tendency not to ask questions of their dentist because they respect that he’s a professional and he’s delivering a professional service,” says Selinger. “However, he has an obligation to tell you what’s being done and what’s being charged to either you or your plan.”
Given the potential for overcharging, O’Brien says employees must look at their invoice and assess the charges.
Challenges for employees: invoices and fee guides
But assessing a dental invoice is challenging. For starters, employees must know their plan maximums and be aware that their coverage usually allows some procedures, such as recall exams and X-rays, once per frequency period of the plan. Others, like scaling, are billed in units up to a maximum.
Another difficulty, says O’Brien, is employees must identify the code used for each procedure to confirm that the type of work and number of units, if applicable, are correct.
“The issue with dental is that it’s all code driven,” says Selinger.
“There are procedure codes that are five digits,and each one of them means something specific. But the average patient doesn’t necessarily understand what that is.” For example, various root canals range in price according to specific teeth and the associated difficulty of the procedure.
Another common invoice surprise occurs when employees must partially pay out of pocket when they expected the plan to cover a routine procedure. That happens when a dentist’s fees are greater than those published in the provincial fee guide. (Provincial dental associations, except in Alberta, publish annual fee guides, and carriers implement them each year as maximums for procedures.)
Selinger says employees need to be aware that dentists can charge what they want, possibly resulting in those out-of-pocket costs.
Confusing the issue further are lagging fee guides that base claims on last year’s fees to contain costs. Selinger says the practice can confuse employees. “It’s difficult to explain the fee guide situation, let alone a lagging fee guide situation, to a plan member.”
Sychangco says an employer that opts for a lagging fee guide can encourage employees to get service at a better price. For example, employees with long-standing relationships with their dentists can ask them to bill the lower fee. “It’s a matter of making the employee a better consumer,” says Sychangco.
A MAJOR EXPENSE
When it comes to health-care costs, private sector spending on dental care is second only to drugs. In 2012, insurance companies paid $7 billion for Canadians’ dental care, says the 2014 report on national health expenditure trends from the Canadian Institute for Health Information. In comparison, insurance companies paid about $9.6 billion for prescribed drugs.
Riza Sychangco, a partner at Morneau Shepell, says older employees claim are particularly big users of dental plans. Claims are $1,700 per year for those aged 45-49 versus $500 per year for those under 24. Aging and dependants are probable causes.
Action steps to support employees
- Refer to carriers and other experts:
To help employees become better dental consumers, O’Brien suggests employers should first direct employees to plan booklets that outline coverage and reimbursement levels. Many insurers have plan details readily available online, and members can sign in to see if they’re eligible for a procedure, at what percentage and when.
But employers can go one step further with added information.
“Typically, benefits booklets are driven by the language associated with the type of coverage,” says Selinger, citing preventive and basic restorative services as examples. “Does everyone know what falls into that basic restorative category? Likely not. There are very few plans that go into that much detail or that list specific procedure codes.” Informing employees of basic codes, such as recall exams (01202) and X-rays (02144), can help employees assess invoices, she says.
It’s also useful to consult dental associations or carrier wellness portals for further information for both employers and employees, says Weir. “The more information you give your employees, the better off they are.”
Small businesses may need more consultant support, says Conor Quinn, vice-president for group benefits insurance at Co-operators. In contrast, larger businesses may have the human resources infrastructure available to implement sophisticated educational strategies, such as dedicated benefits committees or providing materials with extensive benefits information and plan updates or changes.
- Identify communication opportunities:
Use plan or carrier changes as opportunities to communicate with employees, says Sychangco. That’s what Notarfonzo did with staff at her company.
In the design stage for its new plan, the company conducted focus groups to ascertain which benefits employees wanted most. Notarfonzo says focus group participants later took an active role in sharing their knowledge of the new plan with colleagues.
“That is one of the best strategies that works,” she says, referring to focus groups. “Employees want to be part of the planning process and have their voices heard. When they do, they become champions of the plan.”
Information was also key. “We worked with Morneau to develop an employee brochure that gave a lot of detail in a very simplified manner: the high points of what’s changing, what coverage looks like.” In addition, the company had an education session and lunch-and-learn programming. Further, its consultant spoke at an employee meeting, and there were informational emails and online meetings about the new plan.
- Leverage the plan:
Employers can use plan design to motivate employees to educate themselves, says Quinn. “Where there are co-pays or where employees are required to fund part of their benefits in some way, it helps support the conversation.”
Weir agrees, saying a 20% co-payment will ensure employees look at their invoice and question their dentist.
- Ensure employees know their responsibilities:
Employees shouldn’t rely on dentists to know their coverage, says Selinger. They should submit requests for predetermination if they’re unsure whether the plan covers a procedure.
Employers should tell employees never to sign blank forms for their providers, says Sychangco, referring to the assignment of benefits form. Signing off may be convenient but it could result in added charges.
If plan members want to report plan abuse or other problems, they can phone the carrier’s confidential hotline. If warranted, the carrier then contacts the appropriate provincial authority, says Selinger.
- Make a statement:
Employers can also prepare and distribute an annual total rewards statement that documents salary, vacation, pension and benefits, all in dollar amounts.
“‘Here’s what your benefits cost, here’s the value of these benefits and here are things you can do to help us, as a collective, manage costs,’” says Quinn. When employers share the costs and usage of the benefits program with employees, he says, it helps them see the bigger picture and become more invested.