How dental insurance companies calculate the UCR fee

| November 11, 2008

What does UCR fee stand for?

Well… the letters in UCR stand for Usual, Customary, and Reasonable.  Almost sounds like the Insurance company is doing extensive surveys of dental fees in your zip code and then taking the average, say 70% – 75%,  fee.  But guess what, that is not what the Insurance company does.

Insurance companies  calculate the UCR in differing ways, but it’s usually between the 50th and 80th percentile of what fees are in a geographical area.  The geographical area is not limited to a certain radius around a certain zip code.  It can include an entire state and includes all the rural, urban, and suburban dentists and we all know that location can effect the price for good and services.

The UCR fee guide generated by the insurance company is a price they will allow for every dental procedure they cover.  This is not based on what a dentist actually charges, but what the dental insurance wishes to cover for the premium your employer wants to pay.

And to further complicate things the Insurance company typically only covers 80% of their UCR fee, so dental benefits were meant to have some patient out-of-pocket expense.

It’s amazing that the UCR fee varies between insurance companies and even between different plans in the same company.

This is because dental benefits and the associated UCR fee schedule are determine by the negotiations between the insurance company and your employer.  And the better the dental benefits the plan offers the more you and your employer pay in the premiums to the insurance company.  Your employer has likely selected a UCR fee schedule that corresponds to the premium cost they desire.

So the adage… you get what you pay for…. is alive and well with dental insurance.