From time to time we like to touch on a detailed part of your benefits package that you have probably read or at least heard of but not connected the dots. This is especially true for Dental Insurance. The term UCR comes up in almost every meeting our benefits team sets up. The reason for this is simple… It is a minute detail in how “out of network” dental coverage reimburses services. Insurance payment for covered benefits is based on a combination of usual, customary, and reasonable (hence the UCR acronym!) fee information. With this plan, the dentist is reimbursed for the services rendered based on usual, customary, and reasonable fees as it relates to that of other dentists in a given geographical area.
Who creates UCR? Great question! The dental insurance companies record the fee numbers as submitted by the practitioners on dental claims. They “sell the numbers” to a company, such as the Health Insurance Association of America (HIAA). Since HIAA is not an insurance company, it can compare and analyze fees without worrying about “restriction of trade” litigation. HIAA then “sells” the data back to the insurance companies. The insurance companies then have an entire range of fees from which to compose their very own UCRs.
The usual fee is the fee usually charged by the dentist for a particular procedure to private patients. The dentist must file his/her fees with the insurance company ahead of time and they are reflected in the carrier’s records as the dentist’s fee profile. The customary fee for a given service is set by the insurance carrier. The carrier sets the customary fee at a percentile of the usual fees charged by dentists with similar training and experience within the same geographic area. The “out of network” reimbursement, therefore, is set up around the above information for every dentist. Typical industry standards for UCR start at 70th UCR and move up to as high as 90th UCR. As a business providing your employee dental benefits you really want to stay in the 90th percentile as those are the highest reimbursements allowed. This allows your employees to get the most bang for their buck for any potential out of network claims instead of going out of pocket.
What happens if my dentist charges more than UCR? Another great question! The first thing to say is that this doesn’t necessarily mean that you are being “overcharged” by the dentist. That is most people’s first instinct. All insurance companies have varying UCR schedules so it could just mean that your insurance company doesn’t have as strong of a UCR schedule as others. In reality there is a wide fluctuation and no regulation in place currently to see how a dental carrier calculates their UCR.