July 1999
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Foreword
This report proposes a new approach to policy for state financing of dental care for the 20 million children who are at substantial risk of pain and disfigurement because they lack access to appropriate preventive and reparative services. The new approach attempts to improve children's access to care by simplifying the interaction between dentists and public agencies as well as by increasing the reimbursement to providers. The authors of this new approach are dentists who hold elective state office, other members of the Reforming States Group (RSG), and experts on dental care for children.
The RSG is a voluntary organization of leaders in government from more than 40 states who meet regularly to assess their experience in making health policy and frequently report to colleagues about it. The Milbank Memorial Fund, the RSG's co-publisher, is an endowed national foundation established in 1905 that has collaborated with the RSG since its inception in 1992.
In 1997, Ray Rawson, a Nevada legislative leader who is also a dentist, recommended to his colleagues on the steering committee of the RSG that they develop model policy to finance adequate dental coverage for children eligible for the recently enacted federal-state Children's Health Insurance Program (CHIP). Rawson graphically described the suffering that frequently results from untreated dental disease in children and the inadequacies of Medicaid dental programs in most states.
"Dentistry works for children who have access to it," but dentists frequently decline to participate in public dental programs, he continued. Dentists are "independent; many of them distrust government." Many dentists, moreover, are impatient with the problems of patients on Medicaid. Effective policy to improve children's access to dental care would attempt to "eliminate as many as possible" of dentists' concerns about public programs. "All dentists will never agree," but "access can be improved if half of them" accept state dental plans that encourage continuity of care and reimburse them for their costs.
The steering committee asked Rawson and Sandy Praeger, then chair of the RSG, to organize a meeting of experts to consider how to improve children's access to dental care. Participants in this meeting, held in November 1997, were dentists serving in state legislatures and in the executive branch of both federal and state government, academic experts in children's dentistry, an official of the American Dental Association, and an advocate for children. These persons, as well as many others who contributed to this report, are listed in the Acknowledgments.
As a result of this meeting, a work group devised a model dental insurance plan for children eligible for CHIP and supervised the writing and review of a report describing its coverage and cost. In addition to Rawson and Praeger, two legislators who are also dentists joined the work group: State Representatives Peter Knudson of Utah and Gerald Sveen of North Dakota. The Milbank Memorial Fund commissioned James Crall and Burton Edelstein, two children's dentists with experience in research, patient care, and government, to draft the report.
The Fund also engaged Sandra Hunt of PricewaterhouseCoopers, LLP (PwC), to estimate the cost of the model insurance plan, using recent data from California. The percentage of eligible children receiving dental care under Medi-Cal, that state's Medicaid program, had increased after the state raised reimbursement to dentists in response to a court decision. Kimberly Belshe, then director of health services for California and a member of the RSG steering committee, made available recent data on utilization and payment for dental services for children under MediCal. Hunt also used the data to construct an interactive model, available on the World Wide Web, that officials and dentists in any state can use to change assumptions about reimbursement and the number of eligible children and then to calculate the approximate cost of the model plan.
More than 100 members of the Reforming States Group and leaders in dentistry in several states reviewed drafts of this report. Many of these reviewers were skeptical about the appeal of this plan to dentists, even though it would increase their reimbursement from state programs. Some RSG members criticized dentists in their states for opposing both public programs to prevent dental disease and broader licensure for dental hygienists. Others said that increased reimbursement for dentists under Medicaid in their states had neither improved dentists' participation nor increased their willingness to understand why poor children and their caregivers often had difficulty keeping scheduled appointments.
The dentist-legislator members of the work group urged their colleagues in state government to address the causes of dentists' reluctance to participate in public programs. Most dentists are solo providers. They rely entirely on fees to pay for equipment, supplies, and staff and for their personal income. Reimbursement from public programs that only just meets or falls below their costs is a hardship, which is intensified by missed appointments and public agency administrative requirements that consume more time than those of commercial insurers or patients who pay privately.
The dentist-legislators also emphasized that better access to dental care needs to be integrated with more effective programs of dental public health. These programs include outreach to poor children and their families, health promotion, attuning practitioners to the culture of their patients, and school-related prevention and treatment. They also include water fluoridation where there is community acceptance of the practice.
Although public health interventions prevent or postpone dental disease for many children, they are not substitutes for the diagnostic and reparative services that dentists provide to children with disease. The model insurance plan described in this report could address the need for access to diagnostic and curative services among children eligible for CHIP, and perhaps Medicaid as well, in ways that remove, or at least reduce, some of the current disincentives to participation among dentists. Moreover, the plan could increase access at a cost per child that is comparable to what most Americans and their insurers are spending to prevent, diagnose, and treat dental disease.
John M. Colmers
Chair, Reforming States Group
Executive Director, Maryland Health Care
Access and Cost CommissionDaniel M. Fox
President, Milbank Memorial FundSandy Praeger
Immediate Past Chair,
Reforming States Group
Chair, Public Health and Welfare Committee
Kansas SenateRaymond D. Rawson
Assistant Majority Leader and Chair,
Human Resources and Facilities Committee
Nevada Senate
Acknowledgments
The following persons participated in meetings to plan this report and/or reviewed it in draft. They are listed in the positions they held at the time of their participation.
Robert Isman, Director, Children's Dental Health Initiative, The Dental Health Foundation, Davis, California; Kay A. Johnson, Senior Research Staff Scientist, The George Washington University, Center for Health Policy Research; Peter C. Knudson, Chair, Business, Labor and Economic Development Committee, Utah House of Representatives; Kim Moore, President, United Methodist Health Ministry Fund, Hutchinson, Kansas; Sandy Praeger, Chair, RSG Steering Committee, Chair, Public Health and Welfare Committee, Kansas Senate; Judith Pulice, Director, State Governmental Affairs, American Dental Association, Chicago, Illinois; Raymond D. Rawson, Assistant Majority Leader, Chair, Human Resources and Facilities Committee, Nevada Senate; Don Schneider, Chief Dental Officer, Center for Medicaid and State Operations, Health Care Financing Administration, Baltimore, Maryland; Mark Siegal, Chief, Bureau of Oral Health Services, Ohio Department of Health; Richard Simms, Member, Council on Government Affairs, American Dental Association, Harbor City, California; and Gerald O. Sveen, Member, Judiciary Committee, North Dakota House of Representatives.
1999 Reforming States Group Steering Committee
Robert A. Bittenbender*
President, NASBO
Secretary of the Budget
Commonwealth of PennsylvaniaHarriette L. Chandler
Chair, Joint Health Care Committee
Massachusetts House of RepresentativesJohn M. Colmers
Chair, RSG Steering Committee
Executive Director
Maryland Health Care Access and Cost
CommissionJohn F. Cosgrove
Deputy Democratic Leader
Florida House of RepresentativesMark Gibson
Vice Chair at Large, RSG Steering Committee
Policy Advisor for Health Care, Human
Services and Labor
Office of the Governor of OregonRichard N. Gottfried
Chair, Health Committee
New York State AssemblyLee Greenfield
Lead DFL Member, Health and Human
Services Finance Committee
Minnesota House of RepresentativesKemp Hannon*
Chair, Health Committee, National Council
of State Legislators
Chair, Health Committee
New York SenatePatrick J. Johnson
Executive Director
Utah Health Policy CommissionMary E. Kramer
President, Iowa Senate
Vice President, Community Investments
Willmark Inc.Andrew Levin
Co-chair, Ways and Means Committee
Hawaii SenateWilliam N. Martin
Chair, Appropriations––Human Resources
Committee
North Carolina SenateS. Peter Mills
Member, Taxation and Labor Committees
Maine SenateAngela Z. Monson
Vice Chair, Business and Labor Committee
Oklahoma SenateAndrew W. Nichols
Member, Subcommittee on Health and
Welfare of the Appropriations Committee
Arizona House of RepresentativesSandy Praeger
Immediate Past Chair,
RSG Steering Committee
Chair, Public Health and Welfare Committee
Kansas SenateRaymond D. Rawson
Assistant Majority Floor Leader
Chair, Human Resources and Facilities
Committee
Nevada SenateGeorge M. Reider, Jr.*
President, National Association of
Insurance Commissioners
Commissioner
Connecticut Department of InsurancePeggy A. Rosenzweig
Vice Chair, RSG Steering Committee
Ranking Member, Audit Committee
Wisconsin SenateRichard A. Westman
Vice Chair, Appropriations Committee
Vermont House of Representatives*ex-officio member
Executive Summary
This report proposes a publicly funded dental insurance program for the states that targets children-in-need and takes full advantage of prevailing dental financing and delivery systems in the context of the new Children's Health Insurance Program (CHIP). States can modify this program to take account of the number of eligible children and their policy for reimbursing dentists by using interactive actuarial software devised for this report and available on the World Wide Web.
Tooth decay (dental caries) is the most common chronic disease of childhood; it is five times more frequent than asthma, for example. Twenty million children––25 percent of persons under age 19––suffer 80 percent of all tooth decay. For an estimated 4-5 million of these children, tooth decay interferes with routine activities.
Children living in poverty consistently suffer more tooth decay than their more affluent peers. Yet children with the greatest dental treatment needs have the least access to dental care. This disconnect between the presence of dental disease and access to care is worsening despite public health and dental care programs for poor children.
Millions of children are predisposed to dental disease because of dietary, behavioral, and socioenvironmental factors that overwhelm preventive interventions available to them. Children eligible for Medicaid experience twice the rate of untreated dental disease as more affluent children. But states spend only one-tenth as much on dental care for Medicaid enrollees as the national average for all children.
The Reforming States Group (RSG) convened a work group to design a dental insurance program that would use public funds to achieve enhanced access. This program emphasizes broad participation by public- and private-sector dentists, accountability, and fiscal responsibility. The members of the work group included legislators, pediatric dentists, public health officials, and representatives of organized dentistry.
This program defines four levels of dental treatment needs, based on disease severity and the cost of services necessary to prevent tooth decay and restore a child's dentition to a condition of health. The levels are:
- diagnosis, prevention, and disease management
- basic restorative care
- advanced restorative care
- catastrophic care
The program would be linked to new and existing public health interventions that have a major role in improving children's dental health.
At the request of the RSG, the Milbank Memorial Fund commissioned the firm of PricewaterhouseCoopers, LLP, to develop an interactive actuarial model that permits a state to calculate the cost of implementing the program in the proposed or in a modified form. According to the actuarial model, estimated costs for the proposed program are approximately $14.50 per enrolled member per month (PMPM) for direct services and roughly $2.50 PMPM for administrative costs. Officials also can use the interactive actuarial model, which is available on the World Wide Web, to adapt this proposal to the particular demographic characteristics of the covered population and budgetary constraints in any state.
New CHIP Programs
This report explores the opportunity that the Children's Health Insurance Program (CHIP) presents to legislators and state policymakers to develop effective new pediatric oral health programs, reform ineffective pediatric dental Medicaid programs, and maximize the impact of public health approaches to improve the oral health of children who suffer the most dental disease. The report describes the elements of a new state dental program for children in the context of historical problems with state-financed dental coverage for low-income children and of prevailing dental finance and delivery systems.
CHIP allows states considerable flexibility in designing programs. CHIP dental insurance plans proposed by states to date seek to improve the oral health of children by enhancing access to necessary dental services. However, coverage does not ensure access to dental services under Medicaid. Moreover, access promotes children's use of services but it does not ensure that programs will use resources effectively.
There is evidence, however, that well-designed and administered plans can assure coverage that provides value and leads to better health. Such plans are backed by proper financing, implemented with meaningful outreach, and linked to a responsive public and private dental provider community. For example, a state-financed CHIP program in western Pennsylvania was modeled on commercial dental insurance and actively engaged private-sector dentists. This program doubled the number of children who had a dental visit (from 30% to 64%), dramatically increased the percentage who have a regular source of dental care (from 51% to 86%), and almost eradicated unmet dental treatment needs (from 52% to 10%).
Similarly, Michigan's "MIChild" dental plan, implemented in May 1998, serves children enrolled in CHIP. These children are eligible for up to $600 of dental care a year. Dentists who participate in Blue Cross and Delta Dental––85 percent of Michigan dentists––are providing the care. Eligible children are identified only as members of one of these plans. Michigan officials estimate that the plan, which costs approximately $9 per child per month, meets all the needs of about 95 percent of the enrolled children.
The Medicaid Legacy
Publicly funded dental coverage for poor children––principally the 32-year-old Medicaid EPSDT program––has not secured their oral health. Medicaid has provided broad dental coverage but only limited access and services. A 1996 report by the Inspector General of the Department of Health and Human Services concluded that only one in five children enrolled in Medicaid received even a single preventive dental service in a 12-month period and that few enrollees have all of their dental care needs met.
Dental Medicaid programs are unpopular with dental providers as well as consumers. In many states, they have been the subject of successful federal lawsuits on behalf of beneficiaries. Dentists and state officials characterize these programs as underfinanced, cumbersome, at variance with contemporary dental practice guidelines and technologies, and grossly inadequate in their outreach and disease management.
By adapting successful features of private-sector coverage, state CHIP plans can improve on Medicaid and leverage changes in it, because more than 40 CHIP plans are, at least in part, expansions of Medicaid.
The Disparity Problem
The 20 million children and adolescents under age 19 in families with low incomes account for 80 percent of tooth decay. The consequences of this disease for them are at best a frequent distraction and at worst a physical handicap. For an estimated 4-5 million of these children and adolescents, tooth decay severely interferes with eating, sleeping, speaking, learning, playing, and working. The suffering of these children includes the distraction of chronic toothache, searing pain from dental abscesses, disfigured smiles, dysfunctional speech, and eating difficulties. These children struggle through meals, are distracted from play and study, and are embarrassed and humiliated by how they appear to others.
Dental caries is an easily treated disease for most children. For children with extreme dental disease, however, dental caries frequently contributes to distracted behavior and associated poor educational performance. Chronically poor oral health is associated with failure to thrive in toddlers, compromised nutrition in children, and cardiac and obstetric dysfunctions in adulthood.
The Contributions and Limits of Public Health
The overall oral health of American children has improved substantially over the past several decades as a result of public health programs. Increased availability of fluorides is credited with substantial reduction in dental caries. Water fluoridation, a highly cost-effective community-wide preventive approach, reaches 62 percent of the population. The prevalence and extent of tooth destruction is dampened by fluoride exposure. However, disease rates among low-income children in fluoridated areas continue to be high relative to rates among children in more affluent households. Similarly, public programs that provide sealants––plastic coatings for chewing surfaces of permanent teeth that are particularly susceptible to decay––reduce but do not eliminate the need for restorative care.
Federal-state Maternal and Child Health (Title V) programs support many fluoridation, sealant, and dental public health efforts. However, these programs have not focused aggressively on children at high risk for dental disease through health promotion and early intervention.
The Public and Private Dental Delivery Systems
Ninety percent of the nation's 153,000 dentists are private practitioners in single- or two-person practices. Fewer than one in five dentists (18%) are specialists and of those, only 3,600 limit their practice to pediatric dental care. These pediatric dentists contribute substantial care to low- income children, particularly those who are more difficult to treat because of developmental disabilities or behavioral or medical conditions.
Dentists are located disproportionately in the more affluent and suburban communities where most of their patients live. The Health Resources and Services Administration of the Department of Health and Human Services (DHHS) designates one-third of cities and two-thirds of rural areas as Dental Shortage Areas.
Moreover, the total dental workforce is shrinking relative to population. The supply of newly trained dentists has declined substantially over the past two decades. The number of new dentists is projected to be stable or to increase at only about 1 percent annually. As a result, the current ratio of 1 dentist for every 1,725 people is likely to decline over the next 20 years to 1 dentist for every 1,925 people. However, demand for dental services is growing because an aging population retains teeth longer and because more people are purchasing cosmetic and elective dental services.
There are few safety net providers that offer dental care to underserved populations. Less than half of federally supported community and migrant health centers provide dental care. These facilities target underserved populations but treat both disadvantaged patients and those covered by insurance or able to pay for care out of pocket. Most of the 54 dental schools generate only a small fraction of their clinical income from Medicaid.
Dental hygienists deliver significant preventive services, primarily in private practice settings. If hygienists are linked effectively to dentists who provide necessary restorative care, they can expand access to care for children with caries by performing outreach, screening, referral, and follow-up.
Dental practices that treat large numbers of Medicaid clients profitably by offsetting quality with volume are often disparaged as Medicaid "mills." Many of these practices are, however, the primary source of care for Medicaid clients. Many of them provide mainly low-cost, easily delivered diagnostic and preventive services and pain relief. They do not meet more extensive restorative needs, which are time-consuming and more expensive to deliver. These practices are an unintended consequence of Medicaid reimbursement that is significantly below market rates and of programs that measure productivity by the numbers of clients seen rather than the appropriateness of the services delivered.
Reimbursement for Dental Services
Fee for service is the predominant method of payment for dental services. Less than half the population is covered under dental insurance, most of which is employer-based. Dental coverage typically pays a percentage of the dentists' "usual, customary, and reasonable" (UCR) fees, requires copayments, and has fixed annual and lifetime limits.
Approximately one-third of dentists participate in any managed care program, and only a small portion of their patients have managed care coverage. Capitated managed care has made little impact on dental financing because most dental offices lack sufficient patient volume over which to spread financial risk. Most dentists who do participate in managed care contract only for discounted fee-for-service payment and limit involvement to a small proportion of their practices.
Dentists typically own and operate their own surgical suites and are responsible for all facility, personnel, and administrative costs associated with their operative treatments. Medical surgeons, in contrast, rely on hospitals to bear most of these costs. The American Dental Association reports that dentists' mean overhead costs are 60 percent. These high fixed costs make missed appointments expensive for dentists. Dentists' experience is that patients covered by Medicaid miss a disproportionate number of appointments.
Medicaid programs frequently set administrative requirements that demand additional time from dentists because they are different from what commercial health insurers require. These requirements include unique claim forms, prior authorization requirements, and cumbersome eligibility verification.
The relationship between Medicaid payment rates and the number of dentists who participate is complex. When California raised its Medicaid dental fees significantly under federal court order, the number of participating dentists and children receiving care increased. But overutilization as well as fraud and abuse also increased until the state reinstituted utilization review. Anecdotes from other states that have raised dental fees in response to evidence about dentists' costs suggest that, initially, children who are already getting care get more services. Subsequently, dentists who are already active Medicaid providers see more patients, and more dentists join the program.
Higher reimbursement for dental services will not by itself increase provider participation. Other ways to increase the participation of dentists include effective linkage between school oral health and sealant programs and comprehensive dental care providers, active information and support programs by state and local agencies, tactics that reduce missed appointments, and education to help families get access to dental care.
Public and Private Funding of Dental Services for Children
Medicaid underfunds dental care for children. Dental care is 25-27 percent of total health care spending for children, but it is only 2.3 percent of Medicaid spending for children. That low funding translates to an average expenditure in 1997 of $161 for children who received dental care under Medicaid.
The RSG Dental Work Group Insurance Program
Goals
The RSG dental work group proposes a dental insurance program that would offer children in low-income homes services that are comparable to the care available to children in middle-income families. The program would:
- promote access to continuous primary dental care
- encourage dental provider participation
- assure accountability without undue administrative burden
- achieve more cost-effective use of resources
- target higher-needs children
- provide comprehensive dental care
- lead to improved oral health outcomes
The program emphasizes early and ongoing risk assessment and disease management, market-based fee-for-service reimbursement to dentists, and administrative oversight that is proportional to the intensity of treatment needs and services. After a comprehensive diagnostic workup, each child would be assigned to the appropriate level of restorative care.
Levels of Children's Needs and Thus of Care
The work group described four levels of dental treatment that children need:
- Diagnostic, Preventive, and Disease Management Services (including health promotion, risk assessment, primary prevention, and disease suppression needed for all children)
- Basic Restorative Care (for children with modest needs)
- Advanced Restorative Care (for children with more complex needs)
- Catastrophic Care (for children with severe needs)
The cost of the restorative care a child requires sets the boundaries for the second, third, and fourth levels of care. Restorative care includes dental sealants, fillings, nerve treatments, stainless steel crowns, extractions, and other services that rehabilitate a child's dentition or address other oral diseases and condition.
Actuaries estimated the cost of the program using a fee schedule that reflects current market rates for purchasing dental care. In a state implementing the program, payment would be made according to a fee schedule devised in the relationship between dentists and that state or between dentists and the state's contracted vendors. Fees would be adjusted for inflation.
Enrollees would receive services from public sector or private practice dental providers. Emergency care to relieve pain and/or eliminate infection would be covered on a direct-fee basis outside the four levels of care.
Level 1: Diagnostic, Preventive, and Disease Management Services
At Level 1 dentists have responsibility for diagnostic and preventive care, including the frequency and content of visits. Dentists could receive a fixed annual primary care case management fee that bundles a set of diagnostic and preventive services. Diagnostic services are those necessary to develop a comprehensive treatment plan that both addresses current disease findings and reflects a child's risk of future disease. Preventive services emphasize oral health counseling and fluoride regimens that are specific for each patient.
Dentists would use their clinical judgment to determine the extent of diagnostic work-up appropriate to a particular child (e.g., number and type of radiographs). State officials and the dental profession could devise principles to help practitioners determine the extent of diagnostic work-ups appropriate to children with various clinical presentations. Such guidance would also be useful in oversight to ensure that children receive adequate evaluations.
Assignment of children to Levels 2, 3, and 4 with their attendant billing caps depends upon their initial evaluation. Individual dentists may elect to treat children at any level. Most Level 1 dentists would also take responsibility for Level 2; many for Level 3 as well. Dentists who provide large quantities of diagnostic and preventive care but fall below utilization management standards for providing reparative services would be candidates to be investigated for "skimming."
Level 2: Basic Restorative Care
Children requiring up to $400 of reparative treatment (in 1999 dollars) based on reimbursement schedules (which could be statewide or regional) would receive Level 2 or Basic Care. Their dentists would submit charges on a fee-for-service basis using a standard American Dental Association claim form with no prior authorization requirements.
Dentists whose profiles reflect consistent billing near the $400 Level 2 cap could be evaluated for possible fraud and abuse. Nearly 80 percent of beneficiaries and 25 percent of total program expenditures are likely to be in Level 2, according to the actuarial study commissioned for this report.
Level 3: Advanced Restorative Care
Children with service needs that require between $400 and $1,000 of treatment (in 1999 dollars) would receive Level 3, Advanced Care. Dentists would request prior authorization for all nonemergency care, in order to ensure that these children do not receive excessive or unnecessary care. The actuaries report that about 15 percent of children and 45 percent of expenditures are likely to be in Level 3.
Level 4: Catastrophic Care
Children with exceptional treatment needs––whose estimated reparative services exceed $1,000 in costs––would receive Level 4, Catastrophic Care. These children would receive comprehensive treatment from dentists with whom the program contracts to provide tertiary-level services. Dentists providing comprehensive services for Level 4 patients would be reimbursed, where feasible, at a negotiated modest discount from market-based fees, but with a guaranteed minimum payment per case.
Fees for Level 4 children would be discounted as a market offset for the greater volume of services these children require and the greater efficiency with which Level 4 dentists under contract can provide those more intensive services. The relatively small number of dentists with suitable training and/or experience to provide Level 4 care could compete for contracts to provide care for children with catastrophic needs. Level 4 care would require prior authorization that would include consultation with a specialist in pediatric dentistry. Children requiring Level 4 care frequently require dental surgery that is performed under general anesthesia or sedation. These few children––less than 5 percent of beneficiaries––are likely to absorb 30 percent of program expenditures.
Maintenance Care in Levels 1-4
Maintenance care regimens would be established for all children covered by the program. These regimens would be based on formalized risk assessment approaches that could be developed by state officials collaborating with a state's dental community. Maintenance care would normally be provided semiannually for Level 2 children and more frequently for children receiving services in Levels 3 and 4. This care would include ongoing risk assessment, health promotion, and disease prevention. Reimbursement for this maintenance care would be the same as for children who only receive Level 1 services.
States could offer additional financial incentives to dentists for identifying high-needs children and completing their care. Such incentives to provide comprehensive care could be funded by CHIP or Medicaid or through such sources as Title V Maternal and Child Health Block Grants, Head Start, state public health funds, and philanthropy.
Orthodontic Services
Medically necessary orthodontic services would be determined through an objective severity index and provided within Level 4 coverage by suitably qualified dentists. These services could be financed by a reserve fund estimated at 5 percent of the dental program, and reimbursed at 60 percent of the UCR fees in a state or region.
Age Eligibility
Caries is established as a disease process in infant and toddler years. Many experts recommend that children begin to receive dental care by their first birthday, especially anticipatory guidance to their caregivers and primary disease prevention. Medicaid programs cover children from birth through age 21, CHIP to age 18.
Administration
The proposed program would be advertised in ways that resemble commercial insurance. Dentists would be more eager to participate in the program if it uses the standard American Dental Association claim form as well as electronic billing and enrollment verification. The program could also achieve economies of scale by requiring each dentist to treat a minimum number of children.
Costs
At the request of the RSG, the Milbank Memorial Fund commissioned an actuarial analysis of the proposed program from PricewaterhouseCoopers, LLP (PwC). The actuary used data from the California dental Medicaid (DentiCal) program to project the costs and utilization of pediatric dental services for populations of children whose utilization is similar to those enrolled in California Medicaid. The PwC analysis calculated fees at 100 percent of what dentists submitted to Denti-Cal for diagnosis and prevention, and 80 percent of fees for treatment. Based on utilization in California, the resulting estimate for the direct cost of services under the RSG program was determined to be $14 PMPM; $16-17 PMPM with administrative costs included.
Also during 1998 the American Academy of Pediatrics (AAP) commissioned the firm of Towers Perrin to study the cost of providing comprehensive health benefits, including dental services, for children covered by CHIP. Using different methods than PwC, the Towers Perrin actuaries concluded that the sum of direct and administrative costs for providing coverage for preventive, diagnostic, and rehabilitative dental services (with medically necessary orthodontic services) for CHIP-eligible children was $20 PMPM, which was 20 percent of the total cost of comprehensive child health care. This estimate includes administrative costs. After adjusting for this difference using a 15-20 percent administrative cost factor, the Towers Perrin and PwC studies yield similar estimates of $17-18 PMPM to cover basic dental services and program administrative costs.
A $17-18 PMPM cost, the average of the two estimates, is much greater than historical expenditures for Medicaid dental programs but it is consistent with national data on dental spending for all children. About 25-27 percent of child health expenditures are dental care costs, 10 times what Medicaid currently spends for children's dental care.
Accountability
Program/Plan Performance
Tools are available to hold programs and plans accountable. For example, the Health Care Financing Administration's HCFA-416 indicator is a performance measure that could improve the ability of states to assess their overall dental programs, to compare performance across plans where responsibility has been delegated to managed care organizations, and to evaluate service delivery by individual dental care providers. Other performance indicators to evaluate vendors who contract to administer benefits for groups of enrolled children could include the length of time between enrollment and first dental visit, the percentage of children receiving selected preventive services, the percentage of children whose treatments are completed in a timely manner, the claims-loss ratio, and the timeliness of response to requests for prior authorization and of claims paid. HCFA and the National Committee on Quality Assurance (NCQA) recently recommended additional measures of dental plan performance.
Provider Performance
Criteria for accountability could include the percentage of children at Levels 3 and 4 whose submitted treatment plans are completed and the time intervals required to complete treatment plans.
Outcomes Assessment
Positive outcome indicators include reductions in the percentage of enrolled children with unmet treatment needs and increases in the percentage of parents who report having a regular source of dental care for their children and who have obtained dental services. Negative indicators could include the percentage of children whose parents report unmet treatment needs or protracted delays in obtaining dental care, the rate at which parents report dissatisfaction with care, and the percentage of enrolled children who require emergency dental care of nontraumatic etiology.
Advantages of the Proposed Program
The program is simple and understandable by consumers and providers. Its flexibility, levels of care, and use of market-based fees could generate dentists' interest and participation.
The program provides children in low-income households with a source of preventive, basic, advanced, and catastrophic dental services, as well as management of trauma and other dental emergencies. It encourages an ongoing relationship among parent, child, dentist, and dental program. Expanded preventive services allow patients to benefit from up-to-date information about preventing and managing oral disease. The program utilizes a market-based fee-for-service payment mechanism, the only mechanism acceptable to most dentists. According to the policy of a state, it could either welcome any provider willing to accept its levels of payment or require a minimum number of Medicaid enrollees per dentist. The program is focused on prevention and encourages case management. Each general or specialist dentist could treat children up to his or her level of comfort and competence. Difficult cases, qualifying for catastrophic coverage, could be referred. Dentists would, for the first time under a public program, be paid and accountable for providing care that addresses the full range of children's dental needs.
A Program for Each State: Using the Interactive Model
The RSG and the Milbank Memorial Fund asked PricewaterhouseCoopers to devise software that would make it possible to predict the approximate cost of the proposed program to any state by changing some of the assumptions in the actuarial study. This software uses the familiar format of an Excel spreadsheet to calculate the cost, per-member-per-month, of the program in a particular state.
Using this software, data can be entered that is specific to any state's population of eligible children, policies for reimbursing dental providers, and state/federal shares of program cost.
The Excel spreadsheet can be downloaded on the World Wide Web at http://www.milbank.org/990716model.xls. The spreadsheet is accompanied by a "Users Guide to the Dental Pricing Model" that was prepared by PwC. This guide leads users through three worksheets, on each of which they can input state-specific data. The guide also explains how the model uses these data to calculate a per-member-per-month cost using data arrayed by PwC actuaries that is displayed in six accompanying exhibits.
The three interactive worksheets are printed on the pages that follow, in order to clarify how they can be used to generate information for policymakers in a state. The first of the three is headed "Assumptions." Persons using this worksheet on the Web can:
- change the age distribution of children covered
- change the percentage of children expected to use dental services in a particular year, in total, by age or by types of service
- choose to use the Medical dental fee schedule or to input a different fee schedule (this is done in Worksheet 2; see below)
- adjust payments to providers based on the amount claimed
The second worksheet, headed "Dental Fee Schedule," is for users who prefer not to base their calculations on MediCal fees. It consists of a list (only partially printed here) of procedures that constitute 80 percent of billings in the MediCal data. PwC describes each procedure in a phrase as well as by Dental Group and Procedure Code. In the far right column, users in any state can change the average fee under MediCal by age or by type of service. As described above, PwC used Denti-Cal fees to calculate the cost of the program described in this report.
The final worksheet is headed "Summary of Rate." Users of this worksheet can:
- input the average number of children covered under the program in a year
- estimate administrative expenses
- adjust state and federal shares of program costs
Although PwC's "Users Guide" was field-tested by several state officials, questions about it are likely to arise. Hence the Website also facilitates sending e-mail messages to persons familiar with both the software and the proposed program of dental insurance for children.
Worksheet 1: Assumptions
Worksheet 2: Dental Fee Schedule
Worksheet 3: Summary of Rate
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