Fee capping: Why some PPO dentists can charge their full fee for non-covered services

As an in-network dental provider, it’s important to understand what fee capping is and how, or if, it can apply to your patients’ dental insurance plans. Knowing this information will help you determine the correct fee to charge — and also help you remain compliant with insurance laws.

When it comes to insurance rules, the details, fine print, and stipulations that impact your practice seem never-ending. But it’s vital to know and understand a term like fee capping, as it can affect how much you charge and collect from your patients. 

Fee capping comes into play when a patient’s insurance does not cover the procedure a dentist performs as an in-network provider. 

As a revenue cycle management (RCM) provider for dentists, both in- and out-of-network, we’ve talked to dozens of dentists through the years. Among them, there are some who don’t understand fee capping and how it applies to their practice.

We’re able to offer guidance because we can turn to our exclusive pool of dental RCM experts — the DCS Knowledge Network — and access their expertise on the subject of fee capping and other complexities.

Today, we’re clearing up that confusion for you by answering 5 key questions to explain why can some PPO dentists charge their full fee for non-covered services.

If you’ve wondered what fee capping really is and why it exists in the dental industry, or when it applies and what “non-covered services” legislation is all about, then keep reading to get your questions answered.

Key takeaways for dentist fee capping:

• Fee capping is prohibited in almost all 50 states
• Keeping up with dental insurance laws and regulations is a big downside to participating in a PPO
• You should always explain to patients that their treatment is their financial responsibility, no matter what insurance does or does not cover

What is fee capping in dentistry?

Fee capping refers to a Preferred Provider Organization (PPO) controlling the fee you're allowed to charge a patient for a non-covered service.

When a patient comes in for a dental procedure, and their insurance plan does not cover it, fee capping places a limit on how much you can charge the patient for that procedure.

Related: DCS Dictionary: Dental Insurance Billing Terms

Why does fee capping exist in dental insurance?

Fee capping exists to give insurance companies a way to make their dental plans more appealing to patients by offering savings and discounts. Fee capping allows insurance companies to claim that participating in their insurance plan will save the patient money — and it does.

However, the dentist bears the financial impact of the patient's lower-priced services, while the insurance payer or their employer faces none of the financial downsides.  

Related: 5 ways to help patients use their dental benefits by end of the year

How does fee capping apply to PPO dentists?

In a PPO contract, you agree to not bill the patient for amounts above the agreed-upon maximum allowed in the negotiated fee schedule. Whether you, as the PPO dentist, are subject to fee capping depends on what type of plan and any state laws that may apply.

When does fee capping apply?

Almost every state in the US has passed legislation to prevent insurance companies from imposing fee capping for non-covered services to limit what dentists can charge.  

Not all plans are subject to state laws that prohibit fee capping, however.

State fee capping laws apply only to fully insured plans sold in that state. In the average dental practice, about 35% of plans fall under these state laws. These prohibitive laws also don’t apply to self-funded insurance plans and federal plans that follow ERISA rules, as those are governed by federal law, not state law.

For example, even if your state law prevents fee capping, if your patient has a self-funded plan, then your office may still be required to honor that insurance company’s maximum allowed fee schedule. Verify if you’ll have to comply with the plan’s limits for how much you can charge the patient for a non-covered service. 

What is the “non-covered services” legislation, and how does it apply to my dental practice?

Fee capping legislation prevents a dental PPO plan from restricting your fee for non-covered services, allowing you to charge your full fee. Remember that if your state has a fee capping law — and nearly all states do — then this non-covered services law applies only to fully insured plans sold in your state. 

For states with fee capping laws, or non-covered benefit legislation, a fee may still be controlled by insurance companies depending on if — and how — the state defines a “covered service.”

So, what happens if your state has a fee capping law, but it defines covered service as a service in which benefit would be available, but a plan’s limitation was applied that resulted in no payment or in payment of an alternative benefit? 

Then the PPO can control your fee because the service is considered covered, it just was not reimbursed. 

Here are a few examples: 

• A waiting period limitation applies to the claim, resulting in no payment.
• The patient has met their annual benefit maximum, resulting in no payment.
• A patient receives three prophylaxis treatments in one benefit year, but the plan only pays for two. A frequency limitation is applied to the third prophylaxis because it is a covered service.

For each of these examples, the plan will lawfully control your fee. And remember: The patient’s financial responsibility is for the lower contracted fee, and not your full fee that was submitted or your standard fee.

Pro Tip: Make sure your patients understand their out-of-pocket costs for every treatment

No matter what your fee or your fee cap is, you should always explain their out-of-pocket costs when discussing treatment plans with your patients. Transparency is essential for strong patient relationships, and it’s crucial for a successful collections process.

Be sure your team takes the time before a treatment presentation to calculate an estimate of what insurance will cover versus what the patient will pay. Then, during the treatment presentation, they should explain your patient’s insurance coverage to them. This is the time to remind the patient that they are ultimately responsible for the full cost of the treatment if their insurance doesn’t cover it.

This may be unwelcome news, but when you give patients an out-of-pocket estimate, they’re able to plan to pay for their treatment accordingly. Plus, when they understand why they owe what they owe and there are no surprise costs, a patient is more likely to pay with little to no pushback or dispute.

A clear and accurate treatment presentation means you can deliver a high-quality patient experience, no matter what their insurance covers — or doesn’t cover. 

And you can give your team more time to deliver treatment presentations and cost estimates when you automate your patient billing.

When they’re not burdened with the routing busy work of printing bills and payment reminders, stuffing envelopes, processing checks, and making collections calls, your team will have more time and focus for your in-office patients.

Struggling to keep up with dental insurance laws? Turn to the DCS Knowledge Network for help

To recap, here are the facts on fee capping and why some PPO dentists can charge their full fee for non-covered services while some can’t:

• Fee capping limits what dentists can charge for non-covered procedures.
• Fee capping is beneficial for insurers and patients, but it reduces dental revenue.
• Nearly every state in the US prohibits fee capping.
• State fee capping laws, or non-covered benefit legislation, prevent insurers from limiting how much a dentist can charge for a provided service.
• These state laws don’t apply to federal plans, and the definition of “covered service” varies.

It’s important to understand your state’s fee capping laws so you can charge your patients an appropriate fee while remaining compliant — a vital priority when running a dental business.

And remember: For more consistent cash flow, make time for your team to present each patient’s treatment plan with an out-of-pocket estimate to ensure smooth collections at the end of the dental revenue cycle.

If your team doesn’t have time to prepare a treatment presentation and speak individually to every patient about their out-of-pocket costs and payment options, consider automating your patient billing process with DCS Patient Billing to remove those time-consuming, manual tasks from your team’s plate.

Your patients deserve quality dental care for a fair fee, and you deserve to be paid in full and on time for providing that care.

Book a free 30-minute consultation with DCS to start automating your billing process — your patients and your team will love it.