This article was first published in the 1st quarter 2017 edition of Personal Finance magazine.
South Africans value the confidence that comes from having a nice smile and beautiful, straight white teeth. More seriously, uncared-for teeth and gums can have a negative impact on your quality of life and health in general.
Despite this, the period since the introduction of the Medical Schemes Act has been one of lean benefits for dentistry for many medical scheme members. With medical costs increasing steadily at rates higher than inflation, schemes have attempted to keep contributions affordable by cutting or capping benefits.
Between 2002 (when the Medical Schemes Act came into effect) and 2015, the latest year for which we have data, spending on dentists and specialist dentistry decreased steadily when measured as a proportion of the total healthcare benefits paid by medical schemes. Figures from the 1998 Council for Medical Schemes (CMS) annual report show that dental healthcare costs accounted for 7.4 percent of total medical scheme expenses. The 2015 annual report shows dental spending down to just 2.8 percent of total medical spending.
The explanation for this could lie in the dramatic fall in the provision of dental benefits, caused by schemes excluding these benefits completely or paying them only from medical savings accounts, and/or it could be the result of a disproportionate increase in other medical costs, particularly for in-hospital treatment. Yet, according to Dr Guni Goolab, the principal officer of the Government Employees Medical Scheme (Gems), the largest restricted scheme in South Africa, dental benefits are important to his scheme’s members, about half of whom use their dental benefits in any single year.
Dr Neo Khauoe, the principal officer of Sizwe Medical Scheme, estimates that one-third of Sizwe beneficiaries visit a dentist at least once a year.
“Dental benefits are an emotive issue. Medical scheme members take a poor view of schemes that offer insufficient cover, or demand large co-payments for dental procedures,” says Brett de Lange, the director of operations at Dental Risk Company, which manages dental risk expenses for medical schemes.
“We see this in the way that medical schemes choose to highlight their dental benefits in their marketing brochures and marketing drives. They take care with the presentation of dental benefits, as they know that they are important to members,” he says.
Figures published in the latest (2015/16) CMS annual report show that, overall, 214 beneficiaries per 1 000 visited a dentist in 2015 (21.4 percent), while 738 beneficiaries per 1 000 visited a general practitioner. Visits to dentists per member averaged 1.8, compared with 3.7 visits per member to GPs.
Although most people need a dentist less often than a GP, we don’t know what the visits per month should be, so these figures don’t tell us much. Goolab, Khauoe and the CMS point out that some entry-level options offer no dentistry benefits at all. Since dental care is not on the list of prescribed minimum benefits, schemes are not obliged to offer them.
Against this picture of slow decline in dental-care benefits for more than a decade, there is some welcome good news: between 2013 and 2016, the number of schemes outsourcing their dental-risk management to the two major specialist management companies, Dental Risk Company and Dental Information Systems (Denis), and the number of beneficiaries with access to managed dental care, rose dramatically (see table). These companies specialise in contracting with dentists and dental technicians on behalf of medical schemes and managing the dental care of each scheme’s members in accordance with the rules of the scheme. The objective is to provide cost-efficient routine dental services without the need for co-payments, and both companies are bullish about the prospect of achieving this.
Traditionally, dental benefits have been managed by medical schemes containing costs by simply imposing annual financial limits on treatments. A family, or individual family members, would be limited to a certain number of visits to the dentist or claims to a maximum rand value.
There are two disadvantages of this model. The first is that members feel compelled to “get their money’s worth” and use the benefits whether or not they are medically necessary. The second is that, when they are under financial pressure, schemes may opt to increase the value of dental benefits at rates below inflation, so that benefits steadily diminish and benefit values languish well below the true cost of treatment.
Managed-care specialists across all disciplines say their specialised knowledge and experience helps them to contain rising costs, and that this, in turn, means more benefits are paid from risk benefits, instead of from medical savings accounts or co-payments. Schemes say the managed-care model benefits low- and middle-income members particularly.
De Lange says his experience indicates that about 30 to 36 percent of the members of a scheme with low, medium and high options will use dental services in a single year, depending on the distribution of members among the options.
“In a scheme with between 70 000 and 85 000 lives, we would expect the utilisation rate to be between 17 and 25 percent in the low-income, entry-level options, 23 and 30 percent in the middle options, and between 35 and 43 percent in the high options with rich benefits, covering orthodontics and implants, for example,” he says.
David Carolus, the chief executive of Denis, says conservative dentistry (including consultations, cleaning, fillings, extractions and plastic dentures) comprise about 80 percent of total dentistry costs paid for by medical schemes, while specialised dentistry accounts for about 15 percent of total spend.
He says he encourages schemes to offer, at minimum, basic dentistry and cover for impacted wisdom teeth for young adults, a benefit that would normally be classified as specialised dentistry.
“We believe that this is a very important benefit to include in the basic package of dental benefits,” he says. “Unlike tooth decay, which is an entirely preventable condition, people can’t help having wisdom teeth problems. Impacted wisdom teeth lead to other medical conditions later in life if not treated: infection or pain, displacement of other functional teeth, or decay. It is appropriate to remove impacted teeth at an early age.”
Carolus says schemes have realised that there is a definite correlation between preventative, routine dental care and reduced costs for specialised dentistry in future years. “If you can maintain oral status at a high level until the age of 35 or 40, high-cost items such as crowns and implants occur far less frequently,” he says.
How outsourcing works
Schemes that use specialist providers include Gems, Bonitas, Medshield, Medihelp, Sizwe, KeyHealth, Thebemed, PG Group, Discovery Health, LA Health, Bankmed, Wits, Profmed, Transmed, Topmed and Hosmed. As a member, you may not be aware that your dental healthcare is subcontracted by your scheme, much less understand why.
“Dentistry is a specialised field that requires expertise,” De Lange says. “Outsourcing the administration of dental care allows medical schemes to focus on the high-cost items. We can manage dentistry benefits cost-effectively from the risk portion of a medical scheme, which is an attractive plus for members. We can also quickly identify and minimise fraud, waste and abuse of the system,” he says.
The disadvantages include that dental managed care requires beneficiaries to abide by certain treatment protocols. In practice, this often means they have to jump through more hoops to access benefits, such as submitting clinical records and/or providing motivations for specialist dentistry.
According to De Lange, schemes in general do not have a good feel for either the management or the scale of dentistry costs. “Understandably, schemes are averse to open-ended risk,” he says. “We have saved some schemes 22 percent of their costs. This has allowed the schemes to increase contributions by no more than the Consumer Price Index for over six years,” he says.
He believes that both low-income options and comprehensive options benefit from managed care. At entry level, dental managed-care providers manage provider networks and negotiate with “wayward providers” whose prices rise more than others. At the top end of medical scheme options, where members have access to more specialised dentistry, the company monitors two important aspects of dental practice: (i) the kind of work dentists do and the materials and processes they use, and (ii) how the need for certain procedures is determined.
De Lange says managed-care companies like his are also better equipped to manage special needs requests, involving, for example, members with Down Syndrome or age-related conditions. “We can save schemes a lot of future costs if special-needs requests and authorisations are managed immediately.”
Another price-saving strategy is to ensure that dental procedures, particularly specialist procedures, are performed in inexpensive settings such as day hospitals, or even in the dentist’s chair under conscious sedation with an attendant anaesthetist. Carolus says that, in some cases, impacted wisdom teeth can be removed in the dental surgery under conscious sedation, avoiding the need for expensive hospital admissions.
“Different options offer different benefits when it comes to the removal of wisdom teeth. Some schemes allow this procedure only under local anaesthetic, while others encourage the procedure to be done under conscious sedation in the rooms. However, difficult cases with high risks are best carried out in theatre under general anaesthetic,” he says.
Goolab says Gems leaves it up to the provider to decide on the most appropriate dental care and where it is delivered, but the scheme does encourage treatment in the rooms, where possible, by reimbursing providers at a higher tariff.
Discovery Health Medical Scheme’s principal officer, Milton Streak, told Personal Finance that the scheme encourages members to use day clinics by requiring lower co-payments for such cost-effective venues. (Streak has since resigned.)
The trend towards the specialist management of dental care is good news for members, because it results in much greater scrutiny of dental-care providers and a competitive environment, which means that medical schemes have to squeeze every last drop of value out of the dental rand.
As De Lange says, many of the schemes with which he deals realise that one of the few ways they can grow membership is to improve their offerings to the low-income market, which values dental benefits but is being offered the bare minimum.
“The fact that dental care in the state sector is very limited and under pressure highlights the growing need for private dentistry. Employed people also need quicker service than they can get from the state,” De Lange says.