In a move that caused many area dentists’ jaws to drop in surprise, Washington Dental Services (WDS), Washington state’s largest dental insurance provider, recently announced it would cut reimbursement rates by at least 15 percent, starting June 15, 2011.
WDS provides dental coverage for more than two million people in Washington. It’s one of the dental coverage options for some of the largest employers in the region, including Evergreen School District, Clark County and the City of Vancouver. Therefore, not only will many local dentists be affected by the reimbursement cuts, but so will small businesses that support the dental industry (such as labs) and thousands of local patients.
“This [reimbursement rate cut] is not a signal that Washington Dental Services is troubled,” said Tom Gates, vice president of planning for WDS. “We are still financially very healthy. This is in response to pressure on all benefit costs. While dental has not seen inflation at the level of medical in recent years, the reality is the medical inflation that’s happening with employers is putting pressure on all benefit costs. That is resulting in a lot of pressure on dental as well.”
In response to the rate cut, the Washington State Dental Association (WSDA) issued a press release stating, “While we recognize the demands of the current economic climate, we fear that such drastic changes to the fee structure will create significant challenges statewide for dentists and their patients.”
Dr. Daniel Wilson, current president of the Clark County Dental Society (a component of WSDA), said that he received a letter from WDS, explaining that the cut in reimbursement rates was a “bottom line decision.”
“In our case, 94 percent of our premium that people pay us goes directly to dentists, so we only retain six percent for admin,” explained Gates. “That means if there’s significant pressure to lower premiums it just isn’t possible without impacting the cost of the claim. One way we can do that is to reduce benefits, the other is to reduce the per claim fee that we pay to the dentists.”
Dr. Jill Markos, a practicing dentist in Vancouver for 15 years, said dentists have two options: either remain members of the WDS plan and take the cut on the chin, or sever their relationship with WDS. Neither option, she said, is attractive.
“Dentists are concerned about leaving them,” said Markos, explaining that because of the types of companies WDS serves (including Boeing and many school districts), the patients with WDS as their provider were usually well educated, intelligent and proactive about caring for their teeth. Not only that, but they tend to keep appointments and pay their bills on time. In other words, these are patients that dentists want to keep.
In addition, Markos said being a preferred provider for WDS is significant when it comes to volume of patients. She said leaving the provider’s network would represent an $180,000 loss (assuming those patients went to another dentist).
“We’re scared to walk away from that,” said Markos.
Wilson echoed that statement.
“It’s a difficult decision,” he said. “I’m not sure what I’m going to do.”
The effect of WDS’ move will not be limited to dentists alone, according to Markos. If a dentist chooses to remain with WDS, their contract prevents them from raising fees to recoup the lost 15 percent. Therefore, they will look for other ways to save money – such as off-shoring crown and bridge preparation. As an example, she said she received a letter from Modern Dental Labs USA, which has a Bellevue distribution center address, but is actually based in Shenzhen, China. Though off-shore lab fees are cheaper, Markos said many dentists are concerned about off-shore quality of materials and workmanship.
“We’re willing to spend extra money to make sure work is done in the U.S.,” said Wilson.
Markos said she spent $30,000 on lab work in 2010 alone.
“If only a third of the area dentists used an off-shore lab,” said Markos, “I can’t imagine how much money that is!”
Patients could be negatively affected as well, according to Markos, because if their dentist leaves the WDS network and they wish to stay with them, they’ll be faced with the possibility of paying higher out-of-pocket fees (WDS will cover non-member dentists, but patients run the risk of being reimbursed less). As a result, finding a new dentist could be challenging, said Markos, because with the lower WDS reimbursement rates, some dentists may not want more patients with a WDS insurance plan.
When she contacted some of the local employers about WDS’ decision to cut reimbursement rates, Markos said she was somewhat surprised by the fact that few had heard about it.
Jamie Rombaugh, benefits/retirement specialist for Evergreen Public Schools, said, “I’m not in a position to comment right now.” But she did say her department was holding a meeting in mid-June that would address the topic. “We’re watching it,” she said.
Wilson identified another potential impact of the WDS reimbursement rate reduction. He explained that if dentists are losing money, they are less likely to participate in pro bono dental care programs, like at the Free Clinic of Southwest Washington, which provides dental care to unemployed and low-income families in the region.
In the end, Markos said patients may have fewer dentists to choose from. In particular, she said, she was seriously considering closing her practice and taking an early retirement.
“I’m not going to work this hard and not get paid for it,” she said.
Gates said he understands where dentists are coming from and their concerns.
“The dentists are experiencing the same economic pressure we’ve experienced,” said Gates. “The reality is that all of us have to examine our costs, productivity and in the case of dentists, our patient load. We’ll have to make hard decisions.
“They [dentists] have really got to think through what’s best for their practice,” he added.