Cutting Through the Alphabet Soup of Dental Insurance Plans

When you look at the dental options for your employer-sponsored health plan, or if you’re just looking at the options available on the market, you may encounter the acronyms DMO and PPO (also known as a PDN), as well as indemnity plan, in the marketing literature.

These terms describe types of dental insurance plans. To pick the best plan for your own needs, you’ll need to know how each type is structured, and the advantages and disadvantages of each.

The DMO

A dental maintenance organization is very similar in concept to a health maintenance organization, or HMO.

Essentially, DMOs are designed to reduce premiums and costs — at the expense of a certain amount of freedom when it comes to choosing your own dentist.

Under these plans, when you want to receive dental services, you must choose a primary care dentist. If you need to see a specialist, such as an orthodontist or endodontist, you must get a referral from your primary care dentist.

Both HMOs and DMOs attempt to save money and reduce expenses by restricting the number of care providers that the insurance company will allow in the plan.

Negotiators for the insurer approach dentists and clinics in the coverage area and ask them to reduce prices in exchange for a steady flow of referrals from the plan. The fewer providers in the network, of course, the more patients each dentist will receive, and the more valuable the DMO is to the dentist.

They also save money by reducing expenses on specialists. The primary care dentist acts as a “gatekeeper” to more advanced services, and ensures that any referrals to more advanced or specialized levels of care are legitimately medically necessary.

By using restricted networks, leveraging their bargaining power to obtain reduced fees and reducing unnecessary expenses on specialist care, the DMO plan is usually able to realize significant cost savings — and pass those savings along to consumers in the form of reduced, affordable premiums.

These plans are usually best for those who are sensitive to premium costs and who are indifferent about what dentists they can see under the plan.

The dental PPO, aka PDN

A dental preferred provider organization is much less restrictive than its DMO counterpart. You can normally visit any dentist you want who is willing to accept the insurance, and you don’t need a referral to see a specialist.

However, there still may be a network, and your out-of-pocket costs may be lower if you see dentists from within these networks.

You will still have to pay deductibles and copays, but the plan may reduce or waive them for dentists and clinics within the preferred network.

These types of plans may also be referred to as participating dental networks, or PDNs. Their premiums are generally low, but usually not as low as comparable DMO plans.

Indemnity plans

If you have an indemnity plan, you can generally see any dentist who is willing to accept the insurance. You don’t have to restrict yourself to practitioners in the network. If a dentist doesn’t accept direct payment from the insurance company, they may reimburse you directly for covered expenses after the fact.

These plans offer the most flexibility and freedom and the fewest restrictions on care. But they also have the highest premiums.

What’s best for you?

If it’s important for your staff to be able to choose their own dentist or access any specialist they like for covered services, they may want to lean towards the indemnity plan.

Meanwhile, DMOs generally offer the lowest monthly premiums and have low out-of-pocket costs for routine services like cleanings. But, their out-of-pocket costs may rise quite a bit if you need services beyond routine checkups and cleanings. Dentists may try to upsell additional work, which costs more out of pocket.

If you have staff that anticipates needing more extensive treatment, or access to the services of a specialist, they may wish to select a PPO-type plan.

You can talk to us about which plans are available and which might be the right fit for your workplace.