American Dental Association

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON. D.C X 5 W
Peter PI. 	Sfikas
Peterson, Ross, 	Schloerb C 	Seidel
200 East 	Randolph Drive
Suite 9300
Chicago, 	Illinois 	60601-6969
m a r Mr. 	Sfikaaz
This 	letter responds to your reqfuest on b h a l f 	of 	the
American Dental Association 	for a staff advisory opinion
concerning the legality under the antitrust 	laws of a rtudy that
ADA 	progoses 	to conduct of the usual, 	customary and reasonable
(@UCRm) rates that are established by 	dental insurers,
Dental 	indemnity benefit 	plans commonly will pay 	for a given
dental 	service the amount that the insurer determines to be
"usual, 	customary and r e a ~ o n a b l e . ~The patient 	is responsible
for any portion of the dentist's 	charge over the UCR 	amount.
Because different insurers use varying methodologies to calculate
UCR 	levels, patients 	insured under different plans, but 	receiving
identical services from the same dentist, 	may 	receive different
UCR 	benefits. 	Differing reimbursement levels may 	result from
varying definitions of 	the term UCR 	(including the use of
different percentiles 	to establish the customary 	fee screen), 	as
well 	as 	from the use of different charge data to calculate usual
or customary 	fee levels. 	ADA 	wishes 	to increase its
understanding of why 	different 	fee screens are established and
how these different 	fee screens affect consumers.
The ADA 	proposes 	to conduct, 	through an actuarial firm, a
study of 	the various ways 	in which UCR 	rates are established by
insurers and the effects of different UCR dental insurance plans
on the out-of-pocket 	costs paid by 	consumers. 	In particular, the
study will 	focus on the effects on consumers resulting from
varied 	definitions of what 	constitutes a UCR plan, 	different
procedures 	for manipulating charge data, 	use 	of differing data 	on
which UCR 	fee 8creens are based, 	and 	the designation of varying
percentiles of 	the accumulated fee data 	as the UCR 	screen.
During the course of the study, 	an actuarial firm employed
by ADA would 	collect 	from a number of 	insurance companies data
concerning the charges submitted for a specified number of 	dental
procedures over a six-month period. 	This 	information would 	be
used 	to analyze the distribution of, 	and variations in, dental

peter M. 	Zjfikas 	Page 2
fee 	level. 	between, 	and within, various geographic rugfan.,
According 	to your letter, ADA 	Lntendr to take prsc~utionrto
ensure 	that the raw 	fee data 	eupplied 	to the actuarial firnr will
not 	be 	available to ADA 	or its members. 	The report issued 	at 	the
end 	of 	the study will 	not enable any dentist to determine the UCR
fee ecreens used by 	any 	individual insurer in the dentistas
geographic 	area.
The ultimate purpose of 	the study 	is to assist ADA 	Ln
p ~ o p s i n gguidelines for the development and use by 	insurers of
fee screens 	in UCR 	dental 	insurance policies, 	The s ~ u d yIs
intended to result 	in a r e p r t 	that will docwent 	the basic
piincipfes 	t h a t 	ADA 	recornends insurers coneider in developing
procedures 	for detemining 	acceptable fee level. 	under UCR
contracts 	and will 	include statistical analyses designed to be 	of
assistance 	in implementing these principles. 	The reporc will 	b
made 	available Lo the insurance industry and go public
pol icymakers . 	I
ADA 	anticipates that the study may 	indicate that 	it 	is
feasible and beneficial 	to consumers to develop uniform
standards, either through legislation or industry consensus, with
respect to certain terns in UCR 	dental 	insurance plans. 	Among
other things, the report will 	illustrate the potential impact on
insurers* claims costs of 	setting the customary 	fee screen at 	the
Both, 	85th, 	90th, and 	95th percentiles of charges in a particular
area. 	However, you 	state that ADA does not 	intend to recommend
that 	insurers set the UCR 	rate at 	any particular percentile. 	Nor
will 	ADA 	attempt independently to eet 	standards for UCR plans.
Based 	on the infomation you 	have supplied, which 	is
summarized above, 	it does not 	appear that the survey that ADA
proposes to undertake, 	or the study that 	it 	intends to result
from 	it, would violate any 	law enforced by 	the Federal Trade
Commission. 	The antitrust 	laws generally 	forbid agreements among
competitors or their agents that 	fix, 	formulate, or interfere
with 	prices 	or otherwise unreasonably 	restrict the terms of
trade. 	Serious antitrust concerns would 	be raised if ADA 	or 	its
members used 	the survey or the report that ADA 	intends to produce
to facilitate an agreement 	among dentist8 to set or regulate
prices, 	or to exert collective pressure on third-party payor8 	to
accept particular prices or standards 	for reimbursement under UCR
contracts. 	However, 	it does not 	appear that either the survey or
the study 	is likely to have these effects.
With 	respect to the collection of 	information regarding
fees, 	you have stated that the actuarial 	firm would withhold 	raw
@ 	data 	from ADA 	and 	its members, 	and that the report rill not

Page 3
enable dentists to deternine the UCR 	fee screens that particular
insurere use. 	As 	a result, there does not appear to Be a serious
danger that ADA members will use the survey to facilitate an
agreement on prices. is
With 	respect 	to the establishent 	of 	standards for VCR
dental hnefLt 	contracts, you 	have stated that ADA 	does not
intend to recornend that 	insurers adopt any 	spcldic preentile
rate 	for the determination of 	the UCR 	m o u n t , 	and 	that 	it will
not 	establish its own standards. 	Therefore, there does not
a p p a r 	to b an 	imediate danger thae ADA 	will orchestrate or
engage In collective negotiation between dentlets and 	insurers
ursement 	levels or other terns of 	sale of dental
services,
Your 	letter states that AIDA 	anticipates thae Zt mag 	be 	In
the public 	interest to rvtandardize certain t e m s used 	in UCR
dental 	insurance plans, 	and that ADA 	intends to participate,
along with 	the insurance industry, 	in the process 	of 	attempting
to develop such standards. 	Voluntary 	standards can be
procompetitive by 	providing 	consumers with useful infomation 	and
@ making 	it easier 	for them to compare competing products. 	ADA's
discussions with 	insurers about the possibility of 	standardizing
terms, 	and 	its study and recommendations regarding problems 	faced
by 	consumers with UCR 	dental benefit plans, 	do not 	inherently
raise antitrust concerns. 	Of 	course, 	an organization of
competing sellers may 	not 	engage 	in collective negotiations over
price, 	or organize a concerted refusal to deal designed to coerce
buyers 	into accepting terms of trade desired by 	those sellers.
Serious antitrust issues would 	arise if ADA, 	acting as a
combination of 	its members, 	exerted collective pressure on
insurers to adopt particular standards or entered 	into
negotiations with 	insurers to establish dental prices 	or other
terms of 	service.
As 	I am 	sure you 	are aware, 	this opinion is that of 	staff of
the Bureau of Competition only. 	Under the Commission's 	Rules of
Practice S 	1.3(c), 	the Commission is not bound 	by 	this advice and
reserves the right to rescind it at 	a 	later time and 	take such
action as the public 	interest may 	require. 	This office retains
the right to reconsider the questions involved and, with 	notice
to the requesting party, 	to rescind or revoke its opinion if
implementation of 	the proposed 	program 	results in 8ubstantial

Peter W. 	S f i k a s 	Page 1
anticompeeLtive effects, 	if the prsgrm 	is ussd 	for other
Laproper pu 	ses, or If 2% othew~isewould 	be 	fn the public
iaterest to do so.
Assistant 	Director