In the post yesterday concerning the Iowa Medicaid waiver, a commenter asked what the state meant by a “capitated commercial dental plan carve-out”.
This is a common arrangement for Medicaid, Medicare or most private health insurance companies and plans. There are four chunks of information in that phrase. The first is capitated which means a fixed fee per person covered that may or may not be risk adjusted. Given that this is a dental plan and the pool of new members is very large (150,000 or so people), I’m betting that there is minimal risk adjustment. Commercial means the state is outsourcing the benefit. Dental defines the type of benefit, and carve-out is the key piece here. A carved-out benefit is where the general or over-arching policy will not provide a certain set of services but those services will be provided by a third party vendor.
Carve-out benefits are common in three areas; pharmacy, vision and dental. This is because these three areas are very different beasts for institutional and clinical reasons compared to major medical. Expertise in the healthcare world does not easily translate into appropriate expertise in the pharmacy, dental or vision worlds. It is often cheaper and better for a third party vendor to provide dental services. My company is a health insurance company with long standing contracts with a outside vendors to provide dental, vision and pharmacy services for our members. Every time that we have analyzed bringing these knowledge bases in house, the costs don’t pay off for half a generation. In the Iowa case, they indicate that they want a third party to provide a Dental HMO plan.
low-tech cyclist
Just as a data point to buttress what Richard is saying, the Federal Employees’ Health Benefit system basically does its dental and vision insurance this way. You sign up for your broad medical coverage from one insurer, and sign up for dental and/or vision coverage, if you want them, from another.
rikyrah
Glad for your posts. Happy for the deeper explanations.
japa21
Another type of carve-out that is common is mental health benefits. The premium is paid to the basic insurer, but actual MH benefits and management is through another company. For example, at one time, MH services for several payors were managed by Magellan, which would contract with MH providers (usually at below Medicare rates) and handle all authorizations and payments for those services. This is usually mentioned on the back of the insurance ID card.
Large employers who are self-funded will frequently handle the payment of MH benefits, but will contract with one of the specialty companies to handle all authorization and case management duties.
MinbariSafari
Seconding the appreciation for your posts. I work in the health care field (psychiatric office staff) and applaud your efforts to demystify things for folks. I have a question myself re psychiatry – have carve outs for mental health benefits become less common? Our MDs pretty much dropped out of any plans that had them, so I can’t really tell from our patient population whether that approach has proved unsuccessful. I also wondered if they were even allowable anymore under the various mental health parity laws/recent reforms/requirements for mental health coverage, etc. In many, if not most cases, the carve out providers had worse coverage/higher costs to the patients than their major medical. (not to mention the billing headaches they caused for us and the confusion they created for patients)
MinbariSafari
wow, sychronicity, japa21!
StringOnAStick
As usual, what you get through these 3rd party plans is directly related to what you are willing to spend. For example, a real estate agent friend of mine wanted help looking through the list of ‘approved dental providers’ that her firm offered; most of them were chain dental clinics that have a lousy reputation* around here. Being willing to pay more per month got her access to a better level of dental offices.
*things like the dentists having a de facto quota of profit they had to meet each month or else lose their job, and far too many cases where the recommended treatment is far, far in excess of the standard of care. None of this “quota” stuff is ever written down of course, and dentists are notorious for not ratting on each other (plus the state dental board rules typically require non-anonymous complaints before they will act).
Eric U.
semi-OT, a friend has not been able to establish citizenship for purposes of healthcare.gov and by phoning the call center. He’s in Georgia, which I assume is under the federal exchange. Not sure how that works, anyone know?
The Fat Kate Middleton
Thanks very much for this reply, Richard. Now, another question: for my relatives and friends who are asking me about this, it means, then, that if they want to buy dental insurance that will be partially or fully subsidized by the state of Iowa or the federal government, they may be able to do so? As you can tell, I’m a complete amateur when it comes to interpreting all this … but still, for whatever reason, I’ve become the go-to person for this information among my extended family.
mclaren
Once again Richard Mayhew spews gobbledygook buzzwords like “carve outs” to disguise the essential reality of the situation. The cost of American dental care is outrageous and unsustainable, and worse, it’s damaging the health of the population.
The level of greed among American dentists is even worse than on Wall Street — but there’s a big difference. Lack of dental care has been shown by studies to correlate with chronic health problems, particularly congestive heart failure. Naturally, congestive heart failure is an incredibly expensive medical problem to deal with. Patients need intensive care in the ICU, bypass operations, expensive coated stents, expensive heart medications, and eventually super-expensive heart transplants or open-heart operations fix defective valves, etc.
So what do the ignorant greedy people who run the American health care system do?
You guessed it: they ignore all the chronic health problems caused by inadequate dental care and let U.S. dental prices run wild. It’s now 90% cheaper to get your teeth fixed in India than in America. That kind of cost differential is so insane, words don’t exist in the English language to describe the full level of dementia involved.
Obviously any rational society would include basic dental care in any health care reform — so naturally America cannot do so. It’s standard, usual, typical and predictable: figure out the most sensible logical policy to take with regard to health care, and America will do the exact opposite.
And also as usual, Richard Mayhew utters not one word about the grotesque overpricing of U.S. dental care that leads to situations like the one where that guy in Cincinatti died from an abscess:
Source: “Kyle Willis, Cincinnati Man, Dies From Toothache, Couldn’t Afford Meds,” Huffington Post, 3 September 2011.
We now return you to Richard Mayhew’s regularly scheduled upchuck of vacuous health-care buzzwords to distract us from the fundamental problem of American health care — the insane overpricing of basic services like dental care.
The Fat Kate Middleton
The level of greed among American dentists is even worse than on Wall Street — but there’s a big difference. Lack of dental care has been shown by studies to correlate with chronic health problems, particularly congestive heart failure. Naturally, congestive heart failure is an incredibly expensive medical problem to deal with. Patients need intensive care in the ICU, bypass operations, expensive coated stents, expensive heart medications, and eventually super-expensive heart transplants or open-heart operations fix defective valves, etc.
The Fat Kate Middleton
Fkd up the block quote again. Sheesh.
Fellatio Alger
Good God. A dental carve out? That sounds horrendous.
Richard Mayhew
@MinbariSafari: Why wouldn’t carve-outs be allowed. Major medical plans have to offer the essential health benefits (EHBs) without specification as to how those benefits are offered. If a company can offer dental and vision and mental health and prescription from in-house resources, great — if not, why not contract out?
Richard Mayhew
@mclaren: Do you even read what is written and linked before hitting your single payer by fiat or threatening to nationalize 17% of the US economy macros?
I was describing the mechanics of how 150,000 people will be getting dental coverage for either nothing per month out of pocket or $2 or $3 per month if they earn over 100% federal poverty line.
Any profession more complicated than shoveling dog shit will have a specialized jargon. Some of that jargon is intellectual laziness, some is the creation of a barrier of entry, but most of the jargon has a high internal value as it accurately describes complex dynamics in short, concise and mutually understood terminology to the parties involved in frequent conversations.
Fred Fnord
One wonders if the dental plans offered will be like every dental plan I have ever been ‘fortunate’ enough to have myself: ‘we will pay for the occasional amalgam filling but if you need any real work you will end up paying 50% of an absurdly low amount for it, and if you have an in-network dentist who is forced to take that 50%, do not be surprised at a constant stream of attempts to upsell you and bill you for random things (oh the dentist walked into the room while you were getting your cleaning that’s a consultation which isn’t covered by insurance so you have to pay for it out of pocket THANK YOU!). Oh, and of course there’s the standard $2500 per year limit.
Dental insurance, I am fairly convinced, is ALL garbage fake insurance, designed to produce a profit not just on average but from EVERY SINGLE POSSIBLE PATIENT.
Richard Mayhew
@Fred Fnord: Actually Medicaid dental coverage is pretty decent for the dentists who take it. Here is the Iowa dental manual for current Medicaid.