Medicare Advantage

Medicare Advantage Plans Pursue Enhanced Dental Benefits as a Way to Stand Out From Others in the Market

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and analysis on the Medicare (and Medicaid) managed care programs.

By Judy Packer-Tursman, Editor, (tursman@comcast.net)

Dental benefits, which many Medicare Advantage organizations removed from benefit packages as MA payment rates have climbed less than medical costs over the past several years, are increasingly being added back in now, industry analysts and plans say. Moreover, dental care, even though it is not a big-ticket item from a cost perspective, is basically not found in fee-for-service (FFS) Medicare, and thus can be a popular draw in marketing MA plans, they assert.

"Dental is increasingly used as a strategic differentiator" between MA and traditional Medicare, and among competitors in the MA market, actuary Herschel Reich, a principal and manager of the New York office of actuarial accounting firm Reden & Anders, tells MAN. "Clearly, the trend is on the upside to add [the dental benefit] if it wasn't there, or to enhance it if it was just a preventive dental [benefit]. Previously, [MA plans] have just covered cleanings or an exam….Now, subject to copay, some plans are throwing in even more dental care."

For example, as of Jan. 1 Colorado Access expanded dental benefits for enrollees of its MA Special Needs Plan (SNP), a plan designed for people dually eligible for Medicare and Medicaid. A company official told MAN that Colorado Access Advantage decided to provide $1,000 comprehensive dental coverage this year — versus $750 annual preventive dental coverage previously — "because we're finding a lot of unmet dental needs".

Other MA plans, including UCare in Minnesota and Wisconsin, have offered comprehensive dental services to members over the longer term.

While it is difficult to say what most MA plans offer in the way of dental benefits, Reich estimates $3 to $10 per member per month (PMPM), from a "lean office visit to a more comprehensive benefit," as a reasonable range. Typically, he says, the benefit is network-based, with MA plans using subcontractor networks to facilitate coverage, and there is a copayment per dental procedure.

"It's always good to add benefits that don't have much pricing volatility," Reich says. While the dental benefit is usually offered by MA plans through a capitated deal from a vendor, even if there is no such capitated arrangement, he says, "it is usually low risk and not volatile."

Reich explains that MA companies are "always 'back-solving'" in their approach to the market. Plans must decide on a competitive premium level, and then they figure out where to put their federal rebate dollars, which must be used for supplemental benefits or premium reductions, and whether they can afford a dental benefit.

"Here's the trouble: When push comes to shove and when [MA] payment rates don't keep up with expense, the first things to go are dental, hearing aids and other goodies. So, if a competitor's premium is $5 to $10 a month cheaper, but I have a dental benefit, the conventional wisdom is to drop the dental benefit to have a competitive premium," explains Reich's colleague, Stephen Wood, a principal in the Chicago office of Reden & Anders.

Yet Wood says his firm has seen "a dramatic increase" in the number of MA plans offering dental benefits. "It used to be way, way, way the exception…three to four years ago," he says. "Now it's something considered by every plan and for those that can get a network together and afford it, it's generally offered. It's a very attractive benefit. People love it."

Wood asserts that dental benefits fall into the same category as eyeglass benefits from a marketing perspective: Both help to make MA products stand out. "But it's a hard product," he adds. "You've got to get a network, and these dental networks are not easy to come by." Also, he notes that dental is a benefit that "everyone uses to the maximum" coverage limit.

There is some feeling that just having the dental benefit distinguishes an MA plan in the market, according to Wood, while plans are likely to get "less lift" from enhancing dental coverage. He says he hasn't seen a great deal of benefit enhancement beyond cleanings, but some plans are starting to offer restorative work.

Heading Toward a 'Dental Crisis'

Typically, dental expenses run 5% to 10% of overall health expenditures, "so it's always a small piece of the pie," says Gene Sherman, D.M.D., a practicing dentist for 18 years who is vice president for business development and professional relations at AlwaysCare Benefits, Inc. Yet dental care results in significant out-of-pocket expense to most seniors, he says, because employer group coverage usually ends when people retire. Americans are keeping their teeth longer, so they need more dental care longer, and thus it is costing them more out of pocket as their incomes become more limited. "As a result, we're headed potentially toward a dental crisis in this [senior] population," he asserts

Baton Rouge, La.-based AlwaysCare, a third-party administrator that is a sister company to StarMount Life Insurance Co., covers about 360,000 people in group dental and vision benefit plans — with about 60% on the dental side, Sherman says. While most coverage is in the commercial market, he says AlwaysCare provides "carve-out" dental benefits for three MA plans, including WellCare of Louisiana's MA HMO, and Florida-based Universal Health Care, Inc.'s MA private-fee-for-service (PFFS) plan. Sherman says the three MA plans cover dental exams, cleanings and X-rays; copayments vary depending on the market, and range from zero to $20 per service.

In general, most MA plans continue to offer dental benefits that are more preventive than comprehensive in nature, Sherman concedes. "The 'carve-out' for the dental benefit for seniors is not much different than for commercial….Dental is coming last funded," he says. "Once Medicare medical expenses are figured out, they figure out what's left over for dental."

Some MA plans are using discount network arrangements to provide dental services to members, while others are offering dental care as an embedded benefit with the plan, Sherman explains. The discount plan requires patients to pay out-of-pocket, while the embedded benefit typically has minimal or zero copays on the dental exam, cleaning and X-rays.

As MA plans figure out bids on 2009 products to submit to CMS by early June, AlwaysCare is starting to get requests for information on some limited services for teeth restoration, such as simple fillings and denture repair and periodontal cleanings, Sherman notes. "We're starting to see some interest in services beyond the exam, cleaning and X-ray," he says.

"We definitely have more [MA] plans talking to us," Sherman says. "They're asking for two types of quotes: basic services and more extensive services." He says AlwaysCare is able to design the dental benefit on a risk-bearing or an administrative-services only (ASO) basis. "Most dentists don't participate in Medicare…so carve-out plans give us the opportunity to take risk or not take risk and use our networks according to a fee schedule on an FFS basis." He says AlwaysCare has 80,000 "access points" — some with multiple dental providers —across the U.S.

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