Washington Dental Service to cut reimbursement fees 15%

Dentists across Washington state are scrambling to review their business practices and fee schedules after Washington Dental Service (WDS) -- a member of the Delta Dental Plans Association -- announced that it will cut its reimbursement rates by 15% beginning June 1.

The 15% reduction applies across the board to Delta's Premier fee-for-service network for every dentist that participates with WDS, according to Ron Inge, DDS, dental director and vice president of professional services for WDS. Once that reduction has been made, WDS will then calculate the reduction in reimbursement for Delta's PPO network services, he said.

"The PPO reduction depends on the doctor's geographical location," Dr. Inge explained. "It varies by each individual dentist because each has an individual contract and fee schedule with us."

The decision to reduce reimbursements rates was prompted by the ongoing economic crisis and growing competition from other insurance providers, Dr. Inge said. Historically, WDS has raised its fees annually -- until 2010, he noted.

"The economy has impacted everyone," Dr. Inge said. "For us, we had to go back and evaluate all of our costs, including administrative and internal costs to run our business, as well as claims cost payments. And we found that 94¢ of every dollar went to paying dentists, while 6¢ went to internal costs. We had no way to address treatment costs and the costs of claims, and that is what drove us in this direction."

In addition, in recent years WDS has seen increased competition from other large insurers, including MetLife, United Concordia, and Aetna, Dr. Inge said. These companies have been able to contract with Washington doctors at greater discounts than WDS offers, and as a result of these lower premiums, these insurers "now have enough doctors signed up to offer competitive rates to employers," he said.

Some 4,000 dentists currently belong to the WDS network and provide services to about 2.5 million patients. But those numbers could change once the new reimbursement rates take effect, Dr. Inge acknowledged.

"Our conversation with dentists is that this is purely a business decision and that each dentist has to look at his/her business and participation with WDS, and then make that decision on whether or not they can still participate with WDS," he said. "And we expect some to say 'No, I can't do that.' But we expect the majority to look at this from a broader perspective and seek solutions that allow them to participate with WDS."

The bottom line, he emphasized, is that these cuts should help more patients afford dental care.

"The true beneficiary from this is going to be the patient because it does reduce the major barrier to access to care, which is cost," Dr. Inge said. "Dentists need to evaluate their business from more than just the aspect of needing to increase their fees to address the economic crisis we are having right now. That 15% does not necessarily directly affect their bottom line -- there are many other variables that influence that final number, such as how many patients you see, what services you provide, and your business practices."

The Washington State Dental Association (WSDA) declined to comment for this story, citing potential legal complications related to antitrust regulations. However, in a letter posted on the WSDA website, Douglas P. Walsh, DDS, president of the association, wrote:

When you became a participating dentist with WDS, you signed a contract. That contract is between you, personally, and WDS, the corporation. WSDA has no standing in that contract. We cannot interfere with a contract to which we are not a party.

In addition, because this is a fee issue, we are not permitted by the anti-trust laws to represent our members. The law views each of your practices the same way it views General Motors. Under the law, no two businesses can conspire to set or control fees. WSDA represents over 2,500 different businesses. We are not a union and, therefore, not exempt from the law.

The law does permit us to take action by appealing to government agencies, which we did successfully last year by preventing insurance companies from controlling non-covered benefits. However, when it comes to establishing fees contractually, we do not, at this time, see an avenue for legislative or regulatory relief.

Dr. Walsh's letter also offers suggestions circulated by the Pierce County Dental Society and the Seattle-King County Dental Society to determine how these changes might affect a WDS dentist's practice.