Many dental professionals and organizations share the belief that it is unreasonable for a payer to require a dentist to accept a reduced, negotiated fee when the payer has no financial responsibility for it. This is especially true for major services where the predetermined fee may not even cover the cost of the procedure provided. Some even feel that this fee capping could deter dentists from participating in some networks. A lack of participation, especially in rural, underserved areas, could further limit patients’ access to care.

This shared sentiment has led many states to propose and pass legislation preventing fee capping of non-covered services. To date, 36 states have adopted various forms of non-covered services legislation. There is a great deal of contention surrounding this issue, but of the legislative bills that have passed, most have done so by a wide margin. 

Some States such as New York had a bill on file that most dentists did not utilize for years. This is how it reads.

Text to include in complaint about specific insurance company violation of NYS law:

While other states are seeking legislation banning the practice of managed care companies to seek to require contracting dentists to discount their fees for services that are not covered by patients’ benefit plans, this practice has long been illegal in New York State. Under Section 1113(a) of the New York State Insurance Law, it is not an authorized form of insurance to market discounted fees for non-covered health care. That is a form of a discount buying plan, not a form of insurance. New York State Insurance Law Section 3201(a) states that no policy form may contain an item that is not covered under the insurance categories set forth in Section 1113(a). 

Requiring discounts for non-covered services also can be cited as a violation of Section 4224(d)(1) and/or Section 2324 of the Insurance Law because it acts directly and indirectly as an inducement to insureds to purchase non-covered services. The law prohibits this practice as a marketing tactic. A violation of either Section 4224 or Section 2324 is an automatic “defined violation” as an unfair trade practice under Section 2402(b) of the Insurance Law.  Lastly, the scheme of offering a service that is not an authorized form of insurance is also attackable as a “determined violation” under Section 2402(c) of the Insurance Law.  So, this practice of using a discount buying club for non-covered services to help sell an insurance plan has multiple potential problems that can be cited in New York. 

It is important to remember that federal dental plans are not subject to state insurance laws, but are governed by federal law. Therefore, any non-covered services legislation ratified by a state may not apply to dental plans that cover federal government employees (i.e., FEDVIP plans), dependents of active duty military (i.e., TRICARE), or other types of federal plans.

How The Government Works

In addition, self-funded dental plans are regulated by the Employee Retirement and Income Security Act of 1974 (ERISA), and are exempt from state insurance laws. This type of plan is common with large employer groups, unions, government employers, etc. and are often managed by insurance companies serving as third-party administrators (TPA). Furthermore, while only about 25 percent of insured patients are covered by traditional “insured” plans subject to state law, about 75 percent of insured patients are covered by self-funded plans that are governed by federal ERISA Following the success of state legislation, a bill has now been introduced in Congress for federal fee capping legislation. On July 29, 2015, Representative Buddy Carter of Georgia introduced HR 3323, better known as the Dental and Optometric Care Access (DOC) Act. In response to the proposed DOC Act, Congress has assigned a committee to further investigate it.

Iowa’s legislation is the most favorable for dentists

Virginia had one of the most challenging non-covered services legislation battles.