Private Health Insurance - Please explain!
For many people the main reason for taking out Private Health Insurance is to cover the cost of receiving dental treatment.
However, many of our patients are telling us that they find it particularly difficult to know what their entitlements under their Private Health Insurance policy are.
As a general rule, when visiting the dentist your entitlements (or rebate) under Private Health Insurance are determined by 3 main factors:
1. Whether the dental practice you attend is a Preferred Provider practice;
2. The rules & fees set by the Private Health Insurance companies;
3. The level of cover you have selected under your Private Health Insurance;
What does "preferred provider" mean?
A preferred provider dental practice is one that has signed an agreement with one or more Private Health Insurers (Health Funds), whereby the dental practice agrees to be bound by the fee structure set by the Health Fund. In practical terms this means that the Health Fund determines the maximum fee that the dentist is permitted to charge for a particular service.
A dental practice that has not entered into any preferred provider agreements is known as a non-affiliated or independent dental practice. Independent dental practices are able to set their own fee scales which may or may not be in line with those set by Private Health Insurers.
The "preferred" in preferred provider does not imply that dentists that work in preferred provided practices have special skills or expertise compared to dentists in non-affiliated practices. Equally, it does not imply that because they are contractually bound by the fees and rules set by the Health funds they are constrained or prohibited from offering all treatment options to their patients. It is important to remember, that regardless of what type of practice a dentist works in, he or she must meet or exceed the minimum professional standards and is obliged to have the patients best interests in mind when treating them.
Why does it matter if the dental practice is a preferred provider?
As a holder of Private Health Insurance it makes a difference to the rebate you are likely to receive for a dental service depending on whether you attend a preferred provider practice or an non-affiliated practice. In general, a Health Fund will pay a higher rebate for the same service to a preferred provider than they will to a non-affiliated provider.
For example, if a Health Fund determines that the fee for a Check Up is $100.00, then this is the maximum amount a preferred provider practice can charge for this service. Depending on your level of cover, the Health Fund may pay a rebate of, say, $60.00. leaving a balance or "gap" of $40.00. If, on the other hand, you visit a non-affiliated dentist, and assuming they have independently set their fee for a Check Up also as $100.00, the Health Fund may only pay a rebate of $40.00, leaving a gap of $60.00. This is the case even though the Premium paid by the patient is the same whether they visit a preferred provider practice or a non-affiliated practice.
It is worth noting that the preferred provider dentist, at their personal discretion, may choose not to charge the patient the gap, i.e. charge "rebate only", leaving the patient with no out of pocket expense. It is equally worth noting that a non-affiliated dentist may have determined that their fee for a Check up is only $80.00 or indeed $120.00. A non-affiliated dentist may set their fees in such a way that, despite the lower rebate paid by the Health Fund, the patient has no greater out of pocket expenses that had they visited a preferred provider practice. However, the contrary is also true and the patient may have greater out of pocket expenses if the gap between the Health Fund's lower rebate and the dentist's fee is higher.
How do the fees and rules of the Health Funds affect my entitlements?
It is impossible to give a detailed explanation of how the fees and rules of Health Funds affect a patient's entitlements simply due to the huge range of products offered by Private Health Insurers. In the Private Health Insurance Ombudsman's Annual Report for 2013-14 they identified over 20 000 different Private Health Insurance policies each with their own set of terms and conditions.
However, it is possible to give a general indication of some of the more common ways in which the Health Funds themselves determine the entitlements or benefits you can receive under your Private Health Insurance.
The primary way in which your entitlements under your Private Health Insurance are affected is because each Health Fund determines the maximum amount of the fee which a preferred provider practice is able to charge the patient. To complicate matters, different Health Funds often set different fees for the same service. For example, one Health Fund may specify the maximum fee payable for a Check Up is $100.00, whereas another may have a maximum fee of $80.00 or $120.00. These fees are totally at the discretion of each Health Fund, and a preferred provider practice may not charge an amount in excess of the maximum fee specified. However, as explained below, the fee set by the Health Fund is not the same as the rebate paid by the Health Fund.
Another way in which Health Funds affect a patient entitlements is by limiting either the number of services that can be claimed by a patient each year or by limiting the total amount payable by the Health Fund each year. With over 20 000 Health Insurance Policies in the market, patients need to read the Terms and Conditions of their own policy to know which limits apply to them.
How does the level of cover affect my entitlements?
Health Funds also affect a patient's entitlements by limiting the size of the rebate they will pay for a particular service. For example, if the Health Insurance Policy you have selected offers a 60% rebate, then this is the maximum amount the Health Fund will contribute to the cost of the service provided by the dentist.
Using our earlier example, if you belong to a Health Fund that has specified that the maximum fee payable for a Check Up is $100.00 and your policy provides a 60% rebate, then the Health Fund will only contribute 60% of that amount (i.e. $60.00), the remaining $40.00 is the gap or "out-of-pocket" expense for the patient. However, as described earlier, if you visit a non-affiliated dentist then the Health Fund will contribute less than 60%, potentially leaving the patient with a greater out-of-pocket expense.
Again, it is worth noting that regardless of whether the patient chooses to visit a preferred provider dentist or a non-affiliated dentist, the premium is the same; it is simply that Health Funds pay smaller rebates for services provided by non-affiliated dentist. Note also, that non-affiliated dentists are free to set their own fees which may be lower or higher than those set by the Health Funds.
So who benefits the most from Private Health Insurance?
Well, that depends on who you ask!
With Private Health Insurance there are 3 parties involved: the Health Insurance Policy Provider (Health Fund); the Service Provider (Dentist); the Health Insurance Policy Holder (Patient).
Benefits for Health Funds
The Health Funds get to determine the maximum fee a preferred provider can charge a patient for services and to determine the maximum rebate they will contribute towards those services, depending on whether the patient attends a preferred provider on non-affiliated practice.
Each year Health Funds get to review both the premiums charged to patients for their Private Health Insurance and the rebates paid to patients under their Private Health Insurance. In any given year increases in Premiums and Rebates may differ from one another such that Premiums rise, but Rebates may not.
Health Funds that are outside of the not-for-profit sector are able to structure their products to ensure they continue to make a profit each year.
Benefits for preferred provider dentists
Preferred provider practices benefit by being affiliated with large Private Health Insurers that actively market their products and encourage patients to attend preferred practices through better rebates than non-affiliated practices.
Health Funds cannot mandate which dentist you attend, so if you have a dentist that you trust provides the quality of oral health care you expect, and whose services are provide at a cost that you are comfortable with, then that is the dentist you should continue to see; this is regardless of whether they are a preferred provider or not.
However, for preferred provider practices it can also be limiting to have the fees you are able to charge for your services dictated by an external party. This can be particularly difficult where the fee set by the Health Fund does not reflect the true cost of the service, or has not kept pace with inflation.
Additionally, as Health Funds only cover a percentage of the fee charged in the form of a rebate, the gap has to be paid by the patient to the dental practice as an out-of-pocket expense. Patients often direct their frustrations with this arrangement at the dental practice staff member standing in front of them, rather than at the Health Fund which may be more appropriate.
Benefits for patients
For patients the benefit of attending a preferred provider practice is greater certainty around how much the dentist can charge for the services provided and what rebate you will receive under your policy. Attending a preferred provider practice will receive a much higher rebate than if you attend a non-affiliated dentist.
Depending on the rebate provided by the Health Fund and the patient's particular circumstances, a dentist, at their sole discretion, may elect to charge only a part, or none, of the gap (i.e. the difference between the amount of the fee set by the Health Fund and the amount of the rebate paid by the Health Fund). This may apply in the case of both preferred provider practices and non-affiliated practices.
Finally, in the interest of transparency it is important to state that Brisbane Dental is a preferred provider practice for Medibank Private, Bupa and HCF, however, we also accept all other Health Funds. We believe that this model is in the best interests of our patients and we continue to actively campaign within the Health Insurance industry to strive for improved outcomes for patients and dentists alike.
Note: This article provides general information only and should not be construed as advice. For further information on your entitlements under your Private Health Insurance please talk to your insurer directly.