I prefer a free market to regulations, but until we can free the market from previous regulation, sometimes new regulations are required to provide balance. Senate Bill 622 is such an example. Because I am a dentist, I know, and am affected by, this particular abuse intimately, but the principle applies to health insurance across the board, so I will explain the problem from my own Point-of-View. But if the insurance companies get away with this in dental insurance, you can expect it to become a more widespread problem.
Most dental (and other health care) insurance is through Participating Provider Agreements. Under these arrangements, health care providers accept a discounted fee, partly paid by the insurer (or employer as most are self-insured) and by the patient, usually on an 80/20 basis. In return for accepting the discount, the provider enjoys a stream of patients who can afford his services because the majority of the fee is paid by the insurance.
But dental insurers have long sought to replace their PPO plans with “Discount Plans” under which the insurer pays nothing and only “sells” the insured their ability to coerce a discounted fee. As this benefits only the insurer, and the employer who pays the premium, and shifts a huge burden to the patient by eliminating the 80% insurance payment, it makes dental care LESS affordable, so dentists have mostly refused to participate.
So insurers have responded by demanding that dentists accept discounts on non-covered services in order to participate in their PPO plan. Initially, this may appear to benefit the patient as they get a discount on those non-covered, often cosmetic, services their plan does not cover, but this gives the insurer a way to ‘phase in’ discount plans by gradually reducing the services covered until they pay nothing. The goal of the insurers is not to save patients money on those services currently not covered, but to reduce and eventually eliminate their portion of payments on all services.
While insurance companies are exempt from anti-trust laws, dentists are forbidden to collectively bargain the terms of PPO agreements, allowing the insurers to present each individual dentist with take-it-or-leave-it contracts. A single insurer, Delta-Dental, for example, controls about 40% of the local dental insurance market, and few dental practices could survive if they opted out of the Delta Dental PPO. Further, insurance companies, hiding behind their anti-trust exemptions, collude to all offer the same sort of plan.
If dentists were permitted to refuse to participate in a given plan AS A GROUP, we could negotiate with the insurance companies on an equal footing, but we would be prosecuted for restraint of trade by the Federal Trade Commission if we even discussed such an action. This gives insurers an overwhelming advantage in the marketplace.
This leaves us only with legislative action to protect ourselves and our patients. Senate Bill 622 would prohibit such compulsory acceptance of discounts on services not covered by the insurance plan.It should pass, but it faces strong and well financed opposition by the insurance industry and labor unions (which are in effect insurance companies as they self insure their members) and is being mis-characterized as a bill which would only benefit dentists. Such an editorial by Christine Nuckols appears in today’s Virginian Pilot.
In truth, without SB622, within a decade, dental insurance as we currently enjoy it will cease to exist and all of the benefits it has brought, especially access to preventive care and early intervention, will be lost.