One way dental insurance companies limit their liability is to limit the amount of a dentist’s fee that they will accept. This limit has been called the “usual and customary” fee. Their contract stipulates that the company will pay a certain percentage, say 50% or 80% of the “usual and customary” charges for a particular procedure.
Setting such a “usual and customary” charge is reasonable for an insurance plan to do. Medical, homeowners, and auto insurance all have similar provisions. The company has to protect itself against possible price gouging. It can’t guarantee payment no matter what service providers charge.
Historically, the “customary” fee has been arrived at through the use of surveys, and the insurance contract would specify, for example, that they would reimburse at the “80th percentile” level. This means that if 100 dentists were surveyed, and for a certain type of filling, say, 80 of the dentists charged $150 or less, and the other 20 charged more than $150, the company would allow the fee of $150 for that filling.
Ethical codes were also established that said that the dentist would have to charge the same fee for this procedure for every patient. So, if they allowed a fee of $150, but the dentist’s usual fee was $120, then that is the fee that would have to appear on the statement sent to the company. This is the foundation of the concept of the “usual” fee.
However, as time as gone on, and with the competition between insurance companies and the pressure put on them by employers to hold down the costs of policies, some companies have modified the definition of the “customary” fee. Contracts were modified and some removed the concept of taking a survey, and made the “customary” fee to be whatever they wanted it to be. Other companies have kept the survey concept and have simply become slow in updating those surveys. As dental costs escalated in the 90s from more stringent sterilization standards and dental employee safety standards, some insurance companies were just slow to update their surveys, which helped them hold down costs.
What’s the bottom line for you as a dental patient? You should be aware of some of the games that may be going on. If your dentist needs to know whether or not you have insurance before they know what the fee is going to be, be aware that they may be trying to manipulate the system. If your dental insurance company tries to accuse your dentist of charging fees that are too high, in that situation they’re the ones who could be being unethical. An honest response from them when their reimbursement doesn’t cover the entire fee is a simple statement to that effect: “This fee is beyond the level of the allowed benefit.” Anything accusatory in tone from them is considered unethical, and should be reported to authorities. Such communications by dental insurance companies are often an attempt to cover for a plan with limited benefits that was sold to your employer as a “cost-cutting” plan.
This information was personally written by Dr. David Hall.