6 THE ADA PRACTICAL GUIDE TO EXPERT BUSINESS STRATEGIES Essentials of Insurance Administration It is important for the dentist and the administrative team to understand the essentials of insurance administration. Listed below are important topics which comprise essential knowledge to understand. Insured and Self-funded Plans: What’s the Difference? Insurance plans are controlled by various regulatory entities. The dental plan and the dentist must conform to the restrictions established by that entity. “Insured plans,” which are sold to individuals and small employers, are underwritten by an insurance company and are regulated by state law. The administration and policing of these insurance products fall under the State Insurance Commissioner, where available. PPO plans have tried to control the contracted dentist’s fees for non-covered procedures. As a direct result, many states passed non-covered benefits legislation that impacts the contracted dentist’s charges for non-covered services. Health plans of large employers are under federal law called the Employee Retirement Income Security Act (ERISA), if self-funded. These self-funded plans are often administered by insurance companies, who are called third party administrators (TPAs). The employer directly pays all claims approved for their covered employees and the insurance company is not at risk, but is paid an administrative fee. In addition, plans reimbursed by the government, such as federal employees, Medicaid, Medicare, and dependents of active duty military, come under Federal law and states have limited overview or jurisdiction. The tip-off to self-funded plans could be the size of the employer and the employee’s identification card that indicates, “Administered by” or “Administrative Services Only.” Summary Plan Description and the Plan Document The Summary Plan Description (booklet) is routinely distributed to employees and has a brief overview of the patient’s plan and coverage. The booklet is typically 15 to 20 pages long. In addition, there is a Plan Document which is more extensive and could run several hundred pages. It controls the administration of the plan. Only the patient or employee can request a copy of the Plan Document from their human resources department, not through their dental office. Keeping copies of both documents on file can be very helpful in understanding the benefits. It is important that the practice is aware of any restrictions or limitations outlined in the documents. Coverage may change when contracts are renewed every few years, so these documents may have a limited shelf life. Determining Primary and Secondary Coverage (Coordination of Benefits) The primary carrier is the one through which the enrollee is insured (e.g., the patient’s employer rather than a spouse’s employer). If the insured has two jobs and is covered by a spouse, the primary plan for the patient is the plan the patient has had longer. The patient’s second plan will apply next, and the spouse’s plan will apply thirdly. For dependent children covered by a parent’s plan, the primary carrier is generally determined by the “birthday rule,” which is the plan of the parent whose birthday comes first in the calendar year (month/day, not year). For example, if the mother’s birthday is in February and the father’s birthday is in December, the mother’s plan would be primary. A divorce decree, however, can override the conventional birthday rule as to order of coverage. The calculation of the patient’s co-payments and deductibles can be very frustrating and confusing under the best of circumstances. Add to the scenario the fact that the patient is covered by multiple policies and there are different restrictions and limitations associated with different plans. Having