Educating clients about dental benefits pricing

As a broker, you have probably fielded questions from benefits managers who had the experience of receiving different rates from carriers responding to the same rate request.

You can tell them that each carrier has a different approach to underwriting; by applying its own standards and policies to determine its premium rates, each carrier can easily arrive at a different conclusion. Any straightforward comparison between plans, therefore, can be like comparing apples to oranges.

With so much variation, how can you educate clients about which dental benefits carrier is right for them and their employees? Here are some key elements carriers use to determine dental benefits pricing. When clients are shopping for dental plan rates, ask benefits managers to review these factors and match them to the various carrier responses.

Plan design. Basics of plan design include allocation of services, copayments, maximums, deductibles, waiting periods, limitations and exclusions, and coordination of benefits. Look at which dental procedures each carrier considers "basic" services versus "major" services. Beware of "hidden" program design elements to make rates appear low, as when endodontics, periodontics or oral surgery are covered under major services rather than basic services. This could mean these procedures are provided at a lower copayment level.

Also be aware of different policies relating to waiting periods, limitations on x-rays or a missing tooth exclusion. Here's an example of how carriers differ in determining limitations on x-rays: Delta Dental follows the American Dental Association's recommendation of limiting full-mouth x-rays to once every five years for optimum health and safety; other carriers may follow different guidelines.

Dentist networks. The type of a dentist network - traditional fee-for-service, PPO or HMO - can cause premiums to vary due to the contracted dentist fee agreements. Are the size and/or locations of a carrier's dental network adequate for your organization? How are network dentists reimbursed and what happens when patients attend non-network dentists? Is the plan based on use of a traditional fee-for service, PPO or dental HMO network? How many payments are likely to be considered "out-of-network," which can increase an enrollee's costs?

Trend in dentist fees. As part of the underwriting process, most carriers look at annual dental fee trends to determine to what extent professional fees are increasing. Trend percentages between carriers will vary due to the type of network used and established fee monitoring and control. Because Delta Dental's dentists must prenegotiate their fees, Delta Dental is in a position to predict dental trend based on the fees submitted for approval.

Rating. Underwriters review many aspects of the prospective client to determine premium rating. Elements that are considered include the industry type, prior dental plan history, company locations, number of employees, benefit design and eligibility waiting periods prior to receiving benefits.

Funding. What is the ratio of employer-employee contribution? Greater employee contributions can affect enrollment and may increase program utilization. Carriers quoting a dual choice option (between a PPO and HMO, for example) must also estimate the number of employees that will sign up for a particular program, and varying estimates from carriers based on the available program choices may affect premium rates.

Administrative costs. The cost of a plan is determined not only by claims costs but also by administrative expenses. What types of administrative services are offered with a plan? Claims adjudication, dental audit and consultant review are three services to look for. Additionally, account management, customer service, eligibility and billing expertise and online services are essential to good employee benefit communication and satisfaction. Some carriers reduce their administrative rates by not offering a wide array of cost and quality controls or professional oversight, and they may reduce services for the dental coverage to support other products, such as medical. At Delta Dental, we feel it's better to do one thing and do it well.