Kentucky bans vision plan ‘fee capping’ for non-covered services

July 26, 2012

Kentucky has become the first state in the nation to prohibit vision care insurance plans from establishing the fees that vision care providers can charge for products or services that the plans do not cover under their benefit packages.

The new restriction on “fee capping” by vision plans comes as part of an amendment to Kentucky’s insurance law that bars all limited health insurance programs from establishing reimbursements for non-covered services (NCS).

“A participating provider agreement shall not require a participating provider to provide services to an enrolled participant at a fee set by or subject to the approval of the limited health service benefit plan unless the services are covered services under the provider agreement,” the new Kentucky law stipulates.

The provision applies to any insurance company, health maintenance organization, self-insurer or multiple employer welfare arrangement not exempt from state regulation by the federal Employee Retirement and Income Security Act (ERISA), provider-sponsored integrated health delivery network, self-insured employer-organized association, nonprofit hospital, medical-surgical, dental, health service corporation, or limited health service organization authorized to transact health insurance business in Kentucky that offers a limited health service benefit plan.

The new ban on fee capping for non-covered services in Kentucky takes effect this month.

The banning of NCS fee capping has become an important, emerging trend in the regulation of dental plans, the AOA State Government Relations Center (AOA-SGRC) noted.

More than half of all states (27) have enacted legislation barring dental plans from establishing fees for non-covered services – all of them over just the past two years, according to the American Dental Association (ADA) Department of State Government Affairs, which has made a priority of such legislation.

However, the Kentucky law appears to be among the first to broadly bar NCS fee capping by virtually all limited health insurance programs and certainly the first to ban the practice among vision plans, according to the AOA-SGRC.

Vision plan provider contracts commonly limit the maximum fees participating optometrists can charge for products or services – such as a second pair of eyeglasses – that are not covered by the plan, noted William Reynolds, O.D., legislative chair for the Kentucky Optometric Association (KOA) and AOA trustee.

KOA Executive Director Darlene Eakin noted insurance companies often feature both covered benefits and discounts on non-covered services in their marketing materials, suggesting beneficiaries are getting both in return for their premium payments.

However, fee capping arrangements effectively shifted the cost of offering those discounts from insurers to health care providers, she maintains.

“Fee capping for non-covered services involves the insurance plan in a private transaction between the doctor and the patient. Non-covered products and services represent options the patient chooses to pay for out-of-pocket. The new law will not deny patients access to care or result in any increased patient costs for covered health services,” Eakin said.

“Pure” discount programs that offer enrollees reduced prices on health care goods and services from participating practitioners, rather than a benefit package of covered services, will still be available in the state and will not be affected by the new law, Eakin noted.

“Although dentistry has been pursuing this type of legislation for several years, this is the first such victory for optometry, and is an important win in our battle for non-discrimination,” said Bobby Jarrell, O.D., AOA-SGRC chair. “It is basically a law that prohibits insurance companies from capping or discounting fees for those services that are not covered by the insurance. We feel like this really makes sense for all ODs who run their businesses in a free-market economy. We have been encouraging the states to pursue this type of legislation, and hopefully the victory in Kentucky will motivate other affiliates across the country.”

For additional information on NCS fee capping legislation or other state legislative issues contact the AOA SGRC at SLCooper@aoa.org or Breuwer@aoa.org.

One comment

  1. As a fellow resident of Kentucky, I am glad to see healthcare reform finally taking place within the state. With many of us still facing financial problems due to the economic downturn it is very important to have adequate coverage. My current dentist, Jenny Miller Lexington KY provides a wonderful quality of care for her patients. She ensures that they get the best services for their coverage plans!

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