Iowa's largest dental insurer, Delta Dental of Iowa, is notifying its policyholders that on Nov. 1 it will begin adhering to a disputed Iowa Supreme Court ruling made earlier this year that prohibits dental insurers from setting maximum fees, or caps, on services that the insurer does not cover or reimburse.
The ruling means that once a patient has exhausted the maximum benefit for a particular dental service under his or her dental plan, the insurer cannot cap the fee the treating dentist may charge the specific patient for that dental service for the balance of the coverage period under the remaining terms and conditions of the patient's dental plan.
The Supreme Court's May 17 ruling originated with an appeal by the Iowa Dental Association of a decision made by the Iowa insurance commissioner. The commissioner's decision, upheld in a district court ruling but reversed by the Supreme Court, had concluded that Iowa law permitted insurers to limit fees dentists could charge for services that could be, but were not actually, reimbursed under dental plans. The division issued a notice to dental insurers on Oct. 15 saying it would enforce complaints of any rate caps wrongfully imposed by insurers or for any misrepresentations of the decision by insurers.
Insurers were "overreaching in their contractual relationship with dentists," said Larry Carl, executive director of the Iowa Dental Association. "The insurance industry viewed setting a maximum on some services as some sort of marketing advantage," Carl said. "It's like they were saying, 'We have such market control here in Iowa that we can dictate to dentists that we can charge to dentists what we don't even cover.'"
An example of how the new law may apply: A dental plan pays in whole or in part for two teeth cleanings per year and the patient requests a third cleaning during the 12-month period. In that case, the patient is "off the plan" for the third cleaning and the insurer cannot dictate to the treating dentist what his fee to the patient for the third cleaning will be, according to an explanation of the ruling on the Iowa Insurance Division's website.
In its letter to policyholders, Delta Dental said "while it has no obligation to do so," it has elected to reimburse policyholders for the difference between what dentists charge and the contracted or discounted fee it initially reimbursed. Delta Dental said it will reimburse for that differential retroactively between the date of the Supreme Court ruling - May 17, 2013 and today. Insurance holders will have until April 30, 2014, to submit requests for reimbursement.
"This is our way of helping to protect you from unexpected costs during this regulatory transition period," Delta Dental said in the letter.