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Public Policy Options for Better Dental Health: Report of a Study (1980)

Chapter: Dental Care Expenditures and Insurance

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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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Suggested Citation:"Dental Care Expenditures and Insurance." Institute of Medicine. 1980. Public Policy Options for Better Dental Health: Report of a Study. Washington, DC: The National Academies Press. doi: 10.17226/9921.
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CHAPTER 5 DENTAL CARE EXPENDITURES AND INSURANCE An understanding of the magnitude of current and past sources of funding and type of expenditures for dental care is required for projecting costs of a national program. This chapter examines patterns and trends in expenditures for different types of services. It also reviews developments in private dental insurance, including the characteristics of various financing and payment mechanisms. Cost sharing provisions, reimbursement methods, utilization review, and quality control are discussed for their potential effect on a national health insurance program. Expenditures for professional dental services in the United States rank fifth among expenditures for all personal health care services -- after hospital care, physicians° services, drugs, and nursing home care. Dental care expenditures have been increasing slightly more rapidly recently than expenditures for other personal health care services, amounting to $3.7 billion in 1968 and $13.3 billion ten years later. The 1968 dental expenditure figure repre- sented 7.1 percent of all personal health care expenditures; by 1978 the proportion had risen to 7.9 percent 337/. Table 30 has historical data on dental care expenditures as compared with all personal health care expenditures. From 1940 to 1975 the proportion of health care expenditures spent on dental services decreased steadily. However, since 1975 this trend has been reversed. Dental Care Expenditures by Type of Service Estimates of national expenditures for different types of dental services have been derived from findings of the Research Triangle Institute (RTI) study of productivity in general dental practices in the U.S. The RTI data include the percent of charges for each type of service by general practitioners, who constitute about 88 percent of all practicing dentists. Professional judgment was employed to estimate similar distributions for the specialties. The weighted - 73

Table 30. EXPENDITURES FOR ALL PERSONAL HEALTH SERVICES AND FOR DENTISTS ' SERVICES, SELECTED YEARS 1929-1978 Dentists' Services Year All Personal Health Care Amount Percent of _ A= 1929 $ 3,202 $ 482 15.0 1940 3, 548 419 11.8 1950 10,885 961 8~8 1960 23,680 1,977 8.3 1970 65, 723 4, 750 7.2 1975 116,297 8,237 7.0 1976 132,127 10,131 7.6 1977 149,139 11,650 7.8 1978 167,911 13,300 7.9 Source: Gibson, R.M., National Health Expenditure 338/ averages of these percentages were applied to national dental ex- penditure data for 1977, the year in which the productivity data were collected. The resulting estimates of expenditures by type of dental service are shown in Table 31 339/. Expenditures for professionally administered preventive dental services (which include prophylaxis and the application of topical fluorides and teeth sealants) represented only 7.0 percent of the total dollars spent on dental services. Almost all--94 percent-- of the expenditures for preventive services went for prophylaxis; most of the remainder was for fluoride treatments. In addition to expenditures for preventive services provided by dentists, American consumers also spent more than $1 billion in 1976 on oral hygiene products used at home 340/. Basic corrective dental treatment (Table 31) accounts for nearly one-half of total dental expenditures. Operative services are largely for the filling of teeth; about three-fourths of fillings are silver restorations. The remaining basic corrective services are for diagnosis, removable prostheses, and surgery (mostly extractions). These services are the first-line measures for treating dental disease. They generally imply the placement of conservative restorations or the extraction of teeth followed by a partial or full removable denture. The large percentage of reconstructive dental services shown in Table 31 for fixed prostheses reflects the high cost of crowns and bridges. Reconstructive crown and bridge services have become the nation's largest single expenditure for dental care, representing about 31 percent of all dental care expenses and 36 percent of the services provided by the general practitioners. 74

Table 31. ESTIMATED EXPENDITURES FOR DENTISTS' SERVICES, BY TYPE OF SERVICE, 1977 Estimated Amount Percent Type of Service (in Thousands) Distribution Total 11, 650, 000 100 Preventive 815, 500 7. 0 Basic Corrective 5, 626, 950 48.3 - Diagnostic 990, 250 8.5 Operative 2, 935, 800 2 5. 2 Removable Prostheses 1,001,900 8.6 Surgery 699, 000 6.0 Reconstructive 5, 207, 550 44. 7 Fixed Prostheses 3, 588, 200 30.8 Periodontics 233, 000 2 .0 Endodontics 757, 250 6.5 Orthodontics 629,100 5.4 Source: Nash et al. 341/, adjusted according to ADA distribution of dentists by specialty. *Data do not include expenditures for the salaries of federal dentists. Percentage taken on 1977 expenditure to match existing data on practice. Several surveys have collected information on reasons for dental visits. Although it seems apparent that there has been a relative increase in extractions, it is difficult to determine changes in the amounts and types of services delivered. There seems to be, how- ever, a major development in the period between the studies done in the 1950s and 1960s and those conducted more recently. The category "crowns and bridges)' had not been used in previous studies, 342-344/ but it represented the reason for 15.5 percent of all patient visits to general practitioners in 1977 345/. Other data from a later study show that 20 percent of dentists' time is spent providing crown and bridge services, and Table 31 shows that 30.8 percent of all expendi- tures are for crowns and bridges. This finding suggests that changes in dental practice philosophies and restorative technology, as well as the growth of payment plans, are having a substantial effect on the kinds of services provided. To date, no longitudinal studies have been performed to evaluate this substantial shift toward fixed pros- thetic services. Dental Expenditures by Age Dental services for the adult population (ages 19 through 64) cost an average of $54.29 per person per year (Table 32~. For the population under 19, the average dental expenditure is less than for adults, but is a larger proportion of total health expenditures 75

for children and adolescents and represents 12.0 percent of their total personal health expenditures. In the over 65 age group, dental care expenditures represent only 2.5 percent of all private health care expenditures for this age group 346/. Table 32 indicates that no one age group accounts for a markedly disproportionate share of total dental expenditures, which are generally parallel to the proportion of the population in each age group. The somewhat higher per capita expenditures in the 19-64 age group probably reflects the higher reconstruction costs in adult dentistry. ; Table 32. NATIONAL DENTAL EXPENDITURES, BY AGE, FISCAL YEAR 1977 - Dental Percent Expenditures Population Per of Total Percent Distri- Capita Health Care Are Amount* Distribution button Expenditures Expenditures Totals for All Ages $10,020 100 100 $45.41 7.0 Under 19 2,144 19-64 6, 854 21.4 31.6 30.2 12.0 68.4 57.6 54.29 8.2 65 & Over 1, 022 10.2 10. 8 43.2 4 2. 5 .. *In Millions Source: Gibson and Fisher 347-348 / Public and Private Insurance of Dental Services Public expenditures for dental services as a percentage of total health expenditures are small and diminish with age. In the under-19 age group, public payments for dental care represent 4 percent of all health care payments, in the 19 to 64 age group it is 1 percent, and in the 65 and over age group it is 0.2 percent 349/. Programs covering the costs of health services pay a substantially lesser portion of the expenditures for dental care in the United States than they do for hospital, physicians, or nursing home services. Funding for dental care services (Table 33) comes primarily from three sources: 1) private dental insurance, 2) public programs, primarily Medicaid, and 3) direct, out-of-pocket payments from patients to dentists or dental organizations. The great bulk of these expenditures, some 77 percent, are out of pocket. Private insurance accounts for 19 percent and public programs only 4 percent. 76

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Dental insurance is a relatively recent phenomenon as compared with health insurance for other major medical services. The data in Table 34 indicates that private dental coverage has experienced sub- stantial growth in recent years. Table 34. NUMBER AND PERCENT OF CIVILIAN POPULATION COVERED UNDER PRIVATE DENTAL INSURANCE PLANS, 1962-1978 Number Percent of Civilian End of Year (in Thousands) Population 1962 1,006 0.5 1965 3 , 100 1. 6 1966 4,227 2.2 1967 4,679 2.4 1968 5,821 2.9 1969 8,510 4.2 1970 12,210 6.0 1971 15,348 7.5 1972 17, 904 8. 6 1973 22, 008 10.5 1974 32,896 15. 6 1975 34,477 16.2 1976 41,242 19.3 1977 49,747 23.1 1978 a/ 60,000 27 .3 Source: Carroll 351-352 / a/ American Dental Association 353/ The nation's major health care financing program, Medicare, does care and Medicaid entitlements for dental _ not cover out-patient dental _~ _, ~ services for the poor are varied and limited. Indeed, many states have cut back on Medicaid dental care coverage in recent years. Thus, those dental services which are or will be covered by any third-party plans are more likely to be covered by private insurance plans. This trend seems likely to continue. Private Dental Insurance The late development of dental insurance is explained in part by the fact that dental disease has not been regarded as urgent or as life threatening as have some other diseases, and therefore the need to assure access to the services is not so pressing. A more important reason probably is that dental care does not satisfy the traditional insurance industry criteria for insurability. The traditional way to determine whether an event (such as treatment for an illness) constitutes an "insurable risk" requires that several conditions be met. First, the financial loss for any 78

person occurs infrequently; thus pooling the risk spreads the costs. Second, the potential financial loss for any one person is large, so that spreading the risk provides an economic advantage to the insured that is of substantial value. Third, a person has limited ability to affect the frequency of the event insured against, there- fore there is little likelihood that the person will cause the event that is insured against. Dental diseases do not satisfy these criteria. The cost of dental care is not major as compared with hospitalization, and indi- viduals use wide discretion in deciding when to seek dental care and for what kind of treatment. These characteristics, combined with the absence of an adequate data base for predicting the volume of claims and the resulting benefit and administrative costs, led to a reluctance of the insurance industry to offer dental plans. Before 1940 there were fewer than 20 privately sponsored prepaid dental plans in the United States, and most of those were created to meet special problems of isolated industries 354/. By the 1950s the primary impetus for extending dental insurance coverage came from collective bargaining. Wage stabilization policies initiated during World War II and carried over into the Korean Conflict period bolstered the concept of non-wage fringe benefits, because they were exempt from controls. More recently the tax laws, which exclude the value of health insurance premiums paid by employers from workers' taxable income and allow individual deductions for employee contributions to health insurance premises, have encouraged the expansion of health insurance. Once essential coverage for hospital and surgical care was achieved, unions began bargaining for employer-paid benefits for prescription drugs and dental care. Dental insurance is underwritten by dental service corporations, commercial insurance companies, Blue Cross/Blue Shield and independent plans. Some self insurance mechanisms also exist. Dental service organizations are sponsored by state dental societies that contract with groups of consumers to administer prepaid dental care plans. The first dental service organization was the Washington Dental Service, which evolved from 1954 labor-management negotiations 355/. Three years later the American Dental Association formally endorsed the concept of dental service corporations, and in 1965 the ADA established a national agency to coordinate the activities of state dental service organizations, which in 1969 became known as the Delta Dental Plans Association. By 1978 the Association was overseeing 44 such corporations in 47 states and the District of Columbia. They are non-profit organizations that reimburse member dentists on a fee-for-service basis, and allow freedom of choice for both patients and dentists 356/. 79

The Continental Casualty Company was the first commercial firm to offer dental insurance. The availability of ADA statistics on utili- zation and fees made the plan possible, and Continental was guaranteed against losses by the employer. Blue Cross/Blue Shield began developing dental plans in 1965, and in some instances have assisted dental service corporations in administering their plans 357/. Remnants of earlier employer-sponsored dental clinics still exist, as do union-run clinics. However, commercial insurance companies dominate the dental insurance market today; dental service corporations and Blue Cross/Blue Shield are in distant second and third places, respectively (Table 35~. Coverage under private dental insurance increased more than 300 per- cent between 1970 and 1977 (Table 34~. Expenditures for dental care under private plans (Table 35) have grown from $778 million in 1974 to $2,548 billion in 1978 358/. The increases in both enrollment and expenditures have come largely from additional insurance underwritten by commercial insurance companies. Even so, in 1977 about 77 percent of all dental care expenditures were not covered and were paid out of pocket by patients 359/. In summary, private dental health insurance has grown rapidly, and if it continues to grow, 54.3 percent of all Americans would have some type of private dental insurance by 1990 360/. Publicly Funded Dental Care Of the $13.3 billion spent for dental services in 1978, only about a half-billion dollars (or 4 percent) were from public sources (Table 33~. Between 1976 and 1978 private spending rose 33 percent (from $9.6 billion to $12.8 billion) while public spending rose only 11.6 percent (from $483 million to $539 million) 361-362 /. The Medicaid program accounted for $444 million. The rest was spent under a variety of other federal, state, and local government programs. Table 36 identifies the sources of public funding of dental care in more detail. Public funding for dental services takes two major forms: (1) direct provision of services by dentists (or other dental personnel) employed by government agencies, and (2) reimbursement from public funds to privately practicing dentists who furnish services to govern- ment-sponsored patients. The federal programs in the first category include those of the Defense Department, which furnishes dental care to active members of the uniformed services; the Veterans Administra- tion, which furnishes dental care to certain eligible veterans in its own facilities or finances it through the private sector; and the Public Health Service, which furnishes care to American Indians and several other entitlement groups. 80

Table 35. BENEFIT EXPENDITURES OF PRIVATE HEALTH INSURANCE FOR DENTAL CARE, SELECTED YEARS 1970-1978 Carrier 1970 1974 1975 1976 1977 1978 Total (Millions ) Commercial Insurance Companie s Den tal Service Co rporations Blue Cro ss- Blue Shield 3.8 53.5 $240.1 $778.4 $1,074.0 $1,609.3 $2,297.0 $2,548.0* 147.0 332.2 54.0 340.0 Independent Plans Communi ty ~ Consumer Employer- Employee- 525.0 362.0 131.0 1,078.5 1,531.5 285.0 228.4 176.6 237.4 14.0 28.0 26.4 29.5 35.3 Union 20.0 22.4 27.2 37.6 232.7 (Labor- Manage- ment) Private Group Clinic (Health Pro- fessional ~ 1.3 2.3 2.4 2.1 31.7 *Distribution across carriers not available for this year. Source: Private Health Insurance; Selected Issues, Social Security Bulletin; Social Security Administration; U. S. Department of Health, Education, Welfare 363 / 81

Table 36. EXPENDITURES FOR DENTISTS' SERVICES, BY TYPE OF PUBLIC PROGRAM AND SOURCE OF FUNDS, CALENDAR YEAR 1978 Program and Source of Funds Total* Federal State and Local Major Program Areas: Medicaid Federal State and Local Other Medical Assistance Federal State and Local Veterans Administration Other Public Expenditures** Federal State and Local Dental Services (in millions) $ 539 310 229 443 247 196 28 o 28 44 24 19 5 *Rounding may introduce errors. **Includes such programs as Defense Department Contract Spending, Maternal and Child Health, Vocational Rehabilitation, PHS and Other Federal Hospitals, Indian Health Service, and School Health. Source: Gibson 364/ Public expenditures for dental services is mostly in federal and state Medicaid programs, which are required under federal statute to provide dental services to eligible children as part of the EPSDT pro- gram (early and periodic screening, diagnosis, and treatment). Medicaid- eligible children under age 21 are furnished the treatment services found necessary in the screening process, and dental screening and dental care are among the required services. Dental care coverage for other Medicaid eligibles is optional under federal guidelines. In 1977, 36 states covered at least some dental services for adults 365/. Although Medicaid expenditures for dentists' services represent the great bulk of public expenditures for such services (and the proportion is slowly growing), total Medicaid expenditures are growing more rapidly than Medicaid expenditures for dental care. The rate of growth in total 82

Medicaid spending between 1976 and 1978 was 24.5 percent while Medicaid dental expenditures increased only 16.6 percent. Several states have either eliminated or cut back on their coverage of dental care for adults. Medicaid dental expenditures in calendar year 1978 amounted to $443 million 9 of which $247 million were federal dollars. With total Medicaid in 1978 at 18.4 billion, only 2.3 cents of each Medicaid dollar went for dental care. Of the Medicaid dollar spent for services for the elderly, less than one penny goes for dental care 366/. Medicaid dental expenditures go mostly for children (52.3 percent) and adults in families with children (29.4 percent). Only 7.8 percent of Medicaid dental expen- ditures pay for services to the aged; another 11.1 percent is paid on behalf of the handicapped and disabled 367/. Characteristics of Various Financing Systems Cost-Sharing Provisions Financing systems vary in such characteristics as cost sharing (co- payments and deductibles), reimbursement methods (fee-for-service and capitation), and such cost containment strategies as utilization services and quality control. Most private dental health insurance plans contain provisions requiring the patient to pay some part of the cost of the services covered. These cost-sharing provisions can take several forms. "Deductible" means that the patient must pay a pre-established dollar amount before the plan begins to pay. With "coinsurance' the patient is responsible for a certain percentage of costs above the deductible, typically 10 to 25 percent. With "copayment," the patient pays a fixed dollar amount toward the cost of a specific service. (For example, in some drug plans, the patient may be responsible for the first one or two dollars of each prescription regardless of the total price of the prescription.) If the dentist can charge a fee greater than that covered by insurance, the patient may have to pay the difference. This aspect of dental third-party plans is discussed further under the section on reimbursement. Cost-sharing mechanisms are designed to hold down costs to the plan, first, by having the patient, rather than the plan, pay part of the costs of services furnished, and second, by inhibiting utilization. A study in 1973 found that plans covering only basic services were less likely to have cost sharing than comprehensive plans. Almost 85 percent of comprehensive plans had copayments or coinsurance; the rest had a deductible or benefit cap or both. Although the study did 83

not distinguish between coinsurance and copayment, coinsurance is the dominant form; copayment as defined here is less common in dental plans 368/. Because comprehensive plans are more likely to have cost-sharing, and because comprehensive plans sponsored by employers and insured by commercial insurance companies account for most of the increase in dental coverage since 1973, it is likely that the proportion of plans with cost-sharing has increased substantially. Reimbursement Methods Providers of dental services are reimbursed most commonly on a fee-for-service basis. Salaries are frequently used to reimburse providers. Less commonly, a capitation reimbursement system provides an amount intended to cover certain specified services needed by an enrolled population for a stated time period. Fee-for-service reimbursement is of three forms l) a usual, customary, and reasonable fee (UCR), 2) a fixed fee schedule, or 3) a table of allowances. The concept of usual, customary, and reasonable fees was developed by the dental profession, through the California Dental Service, to counter the unpopularity of the use of a fee schedule. It is widely used by the dental service corporations and Blue Cross/Blue Shield and is the favored reimbursement mechanism of organized dentistry 369/. With this approach, fees submitted by dentists for third party reim- bursement are accepted if they fall within the customary range of 90 percent of the dentists in the state 370/. Fixed fee schedules have a set reimbursement for a particular procedure performed, regardless of what the dentist's regular charges might be. Medicaid programs traditionally have used fixed fee schedules; unlike commercial insurance, however, payment under Medicaid must be accepted by the dentist as payment in full. Although payment based on a fixed fee can control the costs for the insurance plan more effec- tively than UCR reimbursement, dentists who resent interference in the establishment of their fees may refuse to participate in fixed fee pre- payment programs. Dentists with traditionally lower fees may prefer a fixed fee program, because it enables them to raise their fees to the established rate. A table of allowances lists the maximum amount an insurer will pay for a particular service. If the dentist's fee is higher than the listed allowance, the patient is held liable for the difference. The obvious distinction between this method of establishing fees and the UCR and fixed fee approaches is that the table of allowances protects only the third party payer. 84

Under a capitation system, the dentist or dental service organiza- tion receives a periodic per capita payment based on an enrolled popula- tion. In return, the provider agrees to deliver a specific set of benefits. The sum required for the capitation payment is based on projections of the amount of covered care that will be delivered and the cost of providing that care. Capitation gives the provider organization an opportunity to plan and budget to meet the health care requirements of an identified popu- lation. It also provides an incentive for dentists to practice and encourage preventive dental care, because it is less expensive over time for a dental organization to provide preventive services than restorative and other more costly procedures. A study of two samples of patients receiving care from the same dentists on either capitation or fee-for-service arrangement found that patients received significantly more preventive services, fewer fillings, and experienced a more favorable modification in their DMF Index under the capitation arrangement 371/. However, these findings are not conclusive because most fee-for-service patients were not insured. Capitation may also have undesirable effects, however, such as minimizing the number of patient visits or services provided or encouraging the provision of lower cost services. Capitation may lead to inadequate restorative care, particularly when beneficiaries of the system are (or are thought to be) transient, thus removing the incentive for the dental organization to place them on a program of maintenance care 372/. In assessing the effects of capitation payment on the cost and quality of the health care provided, it is often difficult to separate the influence of the payment method per se from the influence of the organization setting in which the care is provided. Capitation payment has traditionally been associated with closed panel prepaid group practice plans, or health maintenance organizations. The presumed advantages and disadvantages of capitation payment within a group practice of HMO context have been outlined by Corby 373/ as follows: 85

ADVANrAGISS 1. Quality control . Consul Cation and DI SADVANrA(;E S 1. It is conceivable that capitation peer review within group practices programs could compromise a den- er~courage the dentist to provide of fist's judgment of patient needs. timal dental care for the long term The less treatment provided, the benefit of the patient, rather than less overhead and the more profit. the immed ia te benef i t o f earning s . Peer review is a condition for par- 2. Lack of choice of dentist. Pa- ticipation. tients must receive treatment from a doctor listed as a provider. Prevention. Health education and prevention become strong incentives because dental group practices are paid on the basis of how many pa- tients have enrolled. Early main- tenance is to the advantage o f the denti st and patient . Capitation brings patients into a dental office who may never receive treatment i f the service were no t provided by an employer or union. 4. It eliminates incentives for den- tists to provide certain services over others. Excessive X-rays are eliminated, and pressure to provide 6. crowns rather than fillings would be reduced. 5. Claim forms are eliminated but not statements for services under co- 7. payment s schedules . 6. Seasonal cash flow fluctuations may be less of a problem because capita- tion payment remains constant. 3. Capitation is best suited for group practices; the solo practi- tioner may f ind it much harder to to work as par t 0 f a network . 4. Dentists' services are sub ject to audit and review by the third par ty payer . * Poor access to a dentist within the capitation network may discourage patient utilization. Dentists are responsible for seeing that patients come to the office at least once a year, depending on the contract. Substantial time may be required to bring patients up to maintenance level in the beginning of the program . * Renewal capitation contracts may call for a reduced payment to the provider-dentist . *These disadvantages may also occur when dental health insurance pays for benefits on a fee-for-service basis. 86

Utilization Review and Quality Control A variety of processes and programs other than third-party payer activities contribute to assuring the quality of dental care, including basic dental education, specialty training, licensure, and continuing education activities. The dental profession, usually through state and local dental societies, has created committees to deal with specific instances of questionable quality. Although these committees may have beneficial effects for individual patients who ask for assistance, they are not routine monitors of the quality and appropriateness of dental services. Many dental prepayment programs have instituted routine reviews of utilization and costs of the dental care for which they provide payment. Some of the programs are conducted in conjunction with dental societies. Most of the programs are concerned mainly with the necessity of services and levels of fees; nevertheless, they have some implications for the quality of care. Private plans and Medicaid usually require pre-treatment review of services proposed for their beneficiaries. The frequency with which prior authorization of benefits, prior determination of eligibility for benefits, and other types of pretreatment review are required by various payers is shown in Table 37. These data come from a 1976 survey of prepayment programs which had a low response and some definitional problems, but would be accepted by most experts as generally repre- sentative of current practice among insurers 374/. About 12 percent of the programs had no pretreatment review requirement. In meeting prior authorization or pretreatment requirements, dentists may be asked to submit treatment plans and radiographs for all proposed treatment costing more than a stated amount, typically $100 to $150. Although such claims constitute a small percent of the total of claims submitted, they usually include a high proportion of the more elective and expensive services and therefore represent a substantial portion of all costs paid by the plans. Insurance company dentists review the submissions and determine whether the services are justified. The cost-control measures are not without problems: costs are incurred by both the insurance company and the dentist for handling pretreatment claims and radiographs; the review annoys dentists who have their treatment plans questioned by people unfamiliar with their patients; the patient may be forced to pay out of pocket for denied care. Post-treatment reviews also are required by some insurers, as shown in Table 38. For every type of review, Medicaid and Delta dental plans were more likely to have requirements than were Blue Cross/Blue Shield and commercial insurance programs. 87

The major ongoing review of the quality and utilization of health services is by the Professional Standards Review Organizations (PSROs), mandated by the 1972 amendments to the Social Security Act to review care provided to Medicare and Medicaid beneficiaries. At present, PSROs have limited relevance for dentistry, being mainly directed to acute hospital care. Accordingly, dental services now reviewed are oral surgery and some hospital-based periodontal surgery. PSROs are moving toward the review of ambulatory and long-term care, however, which may include services by the dental profession. Much work is under way to design and implement methods of monitoring and improving the quality of dental care. The ADA has recently issued a joint report of the Councils on Dental Care Programs, Hospitals and Institutional Dental Services, and the Bureau of Economic Research and Statistics, which describes 230 various systems employing a quality assurance program. It covers the categories of inpatient hospital review, ambulatory review, and third party carrier review, and assesses their data bases and associated strengths and limitations. The California Foundation of Dental Health has been funded by the W.K. Kellogg Founda- tion to examine the feasibility of developing quality measures for a peer review system that could be handled by a computer as a first-level screening mechanism. UCLA has also been funded by the W.K. Kellogg Foundation through the American Fund for Dental Health in order to develop an oral health status index which should prove to be useful in comparing the effectiveness of dental care plans. Educational in- stitutions, in particular the universities of Kentucky and Washington, are experimenting with the introduction of quality assurance concepts and techniques in the basic dental curriculum 375/. The Division of Dentistry (DHHS) has supported a series of research projects, conferences, and workshops on quality assurance in dentistry. The interest in and need for quality assurance and utilization review methods are clear, even though much more research is required. 88

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Summary and Conclusions Dental care expenditures have been rising rapidly, reaching $13.3 billion in 1978, or 7.9 percent of all personal health care expenditures. Of this total, private insurance accounts for 19 percent, public pro- grams 4 percent, and the remaining 77 percent are out-of-pocket outlays. Private dental insurance is a relatively late development compared with the growth in private medical insurance. In 1978, about 60 million persons, 27.3 percent of the population, were covered under private dental insurance plans. Ten years earlier, only 5.8 million persons were covered. Part of the reason for the late development of dental insurance is that dental care does not satisfy the traditional criteria for insurability. The portion of dental care funded from public sources is small and is decreasing. Consequently, the low income population covered by public programs is at risk of reduced access to dental care. The com- mittee concluded that children in this special population group warrant access to basic dental services. Dental care costs are lower for children than for adults or the aged. However, children's dental care costs represent a higher percent of their total health care costs. The committee concluded that priority be given to cover children based on their long-range cost-effectiveness in improving oral health through prevention and early control of dental caries. Preventive dental services are estimated to represent only 7 percent of the total outlays for dental services. Reconstructive crown and bridge services have become the largest single expenditures for dental care, representing almost one-third of all dental care expenses. The trend in types of services rendered suggests a shift in expenditures toward higher technology reconstructive services for adults. The priorities for coverage of dental care recommended by the committee rank last the more expensive services for adults--periodontal treatment, restorations, crowns, and bridges. Cost-sharing mechanisms are designed to hold down costs to the insurance plan by requiring the patient to pay part of the cost when services are rendered. Such provisions, however, act as disincentives to use of services. Services that should have increased application because of their potential impact on health should not be discouraged with a cost-sharing mechanism. Thus, the committee recommends that cost- sharing not be applied to preventive dental services. Fee for service is the most common method of paying dentists. More recently, capitation payments have been applied to dental services under health maintenance organizations. A review of the advantages 91

and disadvantages indicates that capitation payment methods appear to embody sufficient advantages to warrant their increased use in the financing of dental services. The committee therefore recommends that alternative prepaid delivery systems and capitation reimbursement systems be made an integral part of the central health program under national health insurance. The review of utilization and the control of quality are essential to the sound operation of an effective national health insurance pro- gram. Several types of quality assurance methods are currently in the development stage which show promise for improving the quality of dental care. The committee concluded that sound mechanisms of quality and utilization review for ambulatory dental care be included in a national health insurance program. The committee also recognized that the successful implementation of quality and utilization review mech- anisms as well as the administration of national health insurance require the development of a sound management information system and therefore recommended that an information system be instituted as an initial component of a national health insurance program. 92

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