THE EDITOR'S CORNER
The article by Kelley Carr on Direct Reimbursement in this issue of JCO calls attention to an innovation in the provision of third party dental benefits which should be actively supported by orthodontists. Dr. Carr, an orthodontist, is currently President of the Indiana Dental Association and has been the prime mover in formulating and promoting the direct reimbursement concept. Direct reimbursement, the non-insurance mechanism, is a direct money payment from the employer to the employee, up to a predetermined amount per year, upon presentation by the employee of a receipted bill for professional services.
Direct reimbursement is cheaper for the employer because it does not include insurance company administrative costs and profit, which Dr. Carr suggests can run as high as 20-30% of the premium for small companies, and because it does not result in increased administrative costs for the dentist. Dr. Carr indicates that the initiation and processing of insurance company claim forms and the involvement of the dentist in the administrative aspect of insurance benefits, such as communication between company and dentist, add substantial costs for the dentist which may be as high as 12-16% and which can only be reflected in increased dental fees. Adding third party administrative costs and profit and dentists' costs related to third party programs results in a huge increase in cost of dental care attributable to the insurance mechanism, particularly for smaller companies. An added benefit to the employer from direct reimbursement is that a tangible benefit passes directly from employer to employee.
Direct reimbursement is better for the dentist because it does not involve interference by the insurance company in the practice of dentistry, with all those restrictive mechanisms, which are important only to the administrative needs of the insurance company--no prior authorization, no alternate course of treatment, no authorization of a lower fee, no fee schedules, no fee percentiles, no participating agreements, no withhold.
Direct reimbursement is better for the patient, because he is clear about what his benefit is and he can spend it in any way he sees fit. He maintains his free choice of dentist--also important to the dentist--which is not always true in insured programs. It is better for everyone that the dentist does not have to raise his fees unnecessarily to include his increased administrative costs due to the insurance coverage of some of his patients. In fact, there is the strange likelihood that the increased cost caused by the insured patients may be spread across the board and a portion of it, therefore, extended to non-insured patients.
Dentistry, including orthodontics, is not truly an insurable item of expense. You can save up for it by prepayment, but "insurance" can only add a cost to dentistry. Dental insurance is a commercial need on the part of the insurance company in order to sell an insurance package, and a bargaining chip in union wage negotiations. Commercial insurance companies have moved in on dentistry. Direct reimbursement is a way of keeping the insurance mechanism out of smaller companies and, possibly, moving it out of larger companies, at least for dental benefits. The direct reimbursement mechanism has been attracting more and more adherence among smaller companies and non-unionized employees.
What's in it for orthodontists? While there is nothing in the basic direct reimbursement program which favors specialties, orthodontists have the same stake that ail dentists do in maintaining the entrepreneurial private practice system of delivery of dental care. This is the most significant potential contribution of direct reimbursement. It alone would justify strong support for this concept by orthodontists. We have a lot to lose if this country loses the private enterprise, individual responsibility concepts.
All dentists, general practitioners and specialists, should make an individual effort to advance the utilization of direct reimbursement in preference to dental insurance. As Dr. Carr suggests, this should be done through personal contact whenever possible. JCO wants to join in this effort. We will offer reprints of Dr. Carr's article (minus the final italicized paragraphs) gratis to any dentist who will mail them to small companies in his area. The names of companies employing 50-500 people in your area may be available through the Chamber of Commerce, newspaper, or state universities' Division of Business Research. In putting the basic idea into the hands of the presidents of small companies in your area, you will be doing your bit to promote a worthwhile idea. Anyone who plans to send the JCO reprint might also wish to obtain the one offered in Dr. Carr's article and mail them together. This will make it easier for the prospect to have the basic information, both articles in one mailing.
