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Employers are increasingly under pressure to keep their benefits budgets "flat"; and with medical care costs continuing to increase at a double digit pace, Benefits Managers are seeking ways to reduce the costs of ancillary benefits such as dental.
In response to this demand for lower premium cost, some dental carriers have introduced controls into their plan designs in the form of contractual limitations and exclusions that can reduce aggregate costs by 10% or more from their standard contracts. Contractual limitations drive benefit payments and are necessary to control fee-for-service benefit plan costs. The differences in contract language among carriers may be subtle; however these subtleties can have implications on cost shifting to employees and affect their perceived value of the plan.
In addition to comparing carriers' network size, discounts, claims management capabilities, etc., Plan Sponsors must be aware of plan limitations in evaluating carriers. For example, among the contractual items C.M. Smith will review are:
- Closed List of Services - When a plan contains a closed list of services, only those services specifically listed in the plan contract are covered. Generic terms such as "Endodontics" or "Periodontics" require further review. For example, is root canal treatment covered under endotontics? Is guided tissue treatment included under periodontics?
- Does the plan provide for follow-up care in support of other dental services provided? - For example, limits to periodontal maintenance can lower plan costs. But if a patient does not receive follow-up care after active periodontal therapy, additional invasive services may be required. This can result in higher plan trend, increased employee costs, and increased dissatisfaction with the plan. Therefore, plans that do not limit follow-up care services can realistically reduce plan costs in the long-term.
Dental coverage is an important benefit. A recent survey of employees reported that 78.6% of respondents suggested that dental coverage was "very important" or "somewhat important" to their decision to accept a job offer (Taylor Nelso/Sofres Intersearch, May 2002).
Given the prominence of dental benefits in a plan sponsor's benefit portfolio, the importance of understanding rate and value drivers is critical and can affect employees' perceived value of the plan.
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