IOWA CITY - Dentists can set their own fees on services that insurers do not reimburse, the Iowa Supreme Court ruled Friday in a decision that will mean higher out-of-pocket costs for patients.
The court's 7-0 ruling means dentists are not bound by the reduced fees included in the contracts they sign to be in an insurance company's provider network, when insurers do not reimburse them. In other words, patients will not receive their insurers' discounts when they have to pay on their own because of coverage limits in their plan.
The Federation of Iowa Insurers, which includes the state's biggest dental insurers such as Delta Dental and Wellmark, said it was disappointed in the ruling.
"This decision will result in dental consumers paying significantly more for their care out of their own pocket," said Scott Sundstrom, a Des Moines attorney who represents the federation. "The irony here is this decision doesn't cost insurance companies a nickel. All of the increased costs, every penny of it, will be borne by consumers."
Sundstrom said the decision could affect a range of patients. Someone who signs up for insurance because of a toothache but gets treatment before a mandatory waiting period expires will now face higher costs, he said, as will patients who need lots of dental work in a given year and exceed annual benefit caps. Prices for services that cost less than a plan's deductible - requiring the patient to pay out of pocket - will now be set by dentists. Patients who get routine teeth cleanings could also face higher prices if they receive three in the same calendar year - more than the two typically covered by insurance, Sundstrom said.
Dan Kegler, an Independence dentist and past president of the Iowa Dental Association, said the ruling allows dentists to charge "what the real cost is for a service" when an insurer refuses to pay. He said it will be critical for dentists to inform patients of costs in advance and get consent before treatment, but that fears of excessive price hikes were overblown.
"The vast majority of Iowa's dental practices are small businesses, and this will help determine what is reasonable, fair and competitive," he said. "We feel like the insurance business overstepped its boundaries and tried to set prices for services not covered by insurance."
At issue is the interpretation of a 2010 law, which barred insurance plans from setting limits on what dentists could charge for non-covered services. Insurers and Iowa's insurance commissioner argued the intent was to prevent a practice by some insurers of demanding lower prices for customers on services they never covered, such as expensive cosmetic work.
But the Iowa Dental Association argued the law change also barred insurers from limiting fees for services that are normally covered but not reimbursed because of policy restrictions - such as waiting periods, frequency limits, deductibles and annual benefit caps. The association advocates on behalf of Iowa's 1,400 dentists.