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My insurance statement says my dentist charges too much

The logic behind this myth is that insurance companies know what the prevailing fees are, and base their reimbursement on the usual, customary, and reasonable (UCR) fee schedule.The reality is that they do know what the prevailing fees are in any area, but they base their reimbursement on a certain percentile of those fees, commonly around the 35th to 45th percentile. That means that if the insurance reimburses at the 40th percentile, the fees normally charged by 60 percent of the dentists will be higher than the fee used by the insurance company. The percentile used is a negotiated item between the insurance company and the employer who purchases the plan.

This is a common source of mis-information. Patients hear that a procedure is covered at 80% and they reasonably expect that, whatever the fee, they will be responsible for the 20% left over after insurance pays. The actual fee may be higher than the percentile used by the insurance to calculate the reimbursement. Let’s take a crown, for example. The range of fees at various offices might be from $600–$1000. The insurance company might use the 40th percentile, and that might represent a fee of $700. Your dentist, however, might charge $800. The insurance benefit is calculated as 80% of their UCR of $700 which is $560. That leaves a difference of (800–560) $240. However, you’re expecting to only owe 20% of the fee of $800 which is $160. That’s quite a difference ($80).

Depending on the nature of the plan, either you owe the difference, or the dentist must write off the difference. It’s not because the dentist charges too much, but rather because the percentile the insurance company uses to calculate their reimbursement is so low that it doesn’t cover the actually charged by the majority of dentists.

The best policy is to discuss your coverage with the insurance coordinator at the office before beginning any course of treatment to avoid surprises and misunderstandings.

Yours in health,

Dr. Bill Greenberg