When it comes to designing Delta Dental PPO™ plans for groups, it can be difficult to find the balance between what employees want and what's most cost-effective for the employer. You may think that allowing for high out-of-network reimbursement will keep group enrollees happy. But high out-of-network reimbursement could actually be hurting your groups and their enrolled employees in unexpected ways.
Out-of-network utilization is when a covered enrollee visits a dentist who isn’t in a Delta Dental network. It may seem trivial, but when a high percentage of enrollees start receiving care outside of their network, there can be unexpected consequences. On an individual level, your group’s enrollees may experience higher costs and miss out on quality guarantees, and high out-of-network utilization can make plans more expensive for everyone to account for the higher cost of care.
Reimbursement is the amount that your plan bases its payment on, also known as the maximum plan allowance. This is separate from the percentage at which certain services are covered.
Under most PPO plans, Delta Dental PPO dentists are reimbursed at PPO fees, and Delta Dental Premier® dentists are reimbursed at Premier or PPO fees. Reimbursement for non–Delta Dental dentists varies by plan. Paying non–Delta Dental dentists based on the 80th percentile or above is considered high reimbursement.
Percentiles are calculated by ranking a set of given fees from lowest to highest. On a list of 10 given fees, the eighth ranked fee would be considered the 80th percentile. There isn’t a set amount of space between percentiles, meaning that some percentiles may have the same fees.
In this simplified example, the 80th percentile is $27 and the 50th, 60th and 70th percentile are all $25. At the 80th percentile, 80% of dentists’ fees are paid as billed. Dentists whose fees are above this percentile are charging more than most dentists in their market.
Reimbursement rates are customizable by plan, dependent on your enrollees’ needs. But having high reimbursement rates for out-of-network dentists can bump up costs across the board. Non–Delta Dental dentists can set their prices wherever they want without being subject to contractual obligations. This not only allows them to charge higher prices but also discourages Delta Dental dentists from staying in network.
To illustrate, let’s assume the PPO contracted fee for a procedure is $1,000. If your plan covers that procedure at 50%, one of your enrollees visiting a PPO dentist would only need to pay $300, and your plan would pay the other $300. For the same procedure, an out-of-network dentist could cost your employee $538.
If your plan’s reimbursement for out-of-network dentists is based on the 90th percentile (which, let’s say, amounts to $925), your plan would pay 50% of $925, or $463. Your enrollee would pay $538.
Delta Dental PPO dentist
Non–Delta Dental dentist
