VETOES

This legislation provides that a dental plan offered by a
dental plan organization shall provide for payment for dental
services to nonpanel dentists (a dentist who has not entered into
a contract with an organization under a dental plan). Section
597A(b)(l) requires that payment to a nonpanel dentist, after all
deductible and copayment provisions have been applied, "may not
be less than 80 percent of the payments made to a panel dentist
for similar services in the same geographic areas."

In most dental plans, panel dentists (a dentist under
contract with a dental plan organization) are paid on a
capitation basis. This form of compensation requires the plan to
pay each panel dentist a certain amount in advance each month for
the subscribers who have indicated that they will use the
dentist's services. For some services provided by the panel
dentist to the subscriber, no additional payment is required.
Other services may require a copayment by the subscriber which is
usually a fraction of the customary fee. Other dental plans have
dentists who are paid on a salaried basis.

In either event, panel dentists in dental plan organizations
are not compensated on a per procedure basis. Accordingly, it
would be administratively impossible to determine if a nonpanel
dentist received a minimum percentage calculated on the basis of
compensation paid to panel dentists for rendering similar
services.

Although proponents of the bill have suggested that Section
597A(b)(2) can be utilized to rectify this result, I am reluctant
to conclude that the General Assembly intended this
provision—-more appropriate for the unique circumstance—-to be
the general operative provision for determining the amount of
compensation for nonpanel dentists. Were this the legislative
intent, there would have been little need for Section 597A(b)(l).
In fact, applying Section 597A(b)(2) in this fashion would result
in the Insurance Commissioner promulgating a fee schedule for
nonpanel dentist in almost every instance. While other preferred
providers' organizations legislation may contain provisions
similar to Senate Bill 349, the basis for compensation under
those plans do not effect the. same administrative problems
presented in this legislation.

Therefore, I have decided to veto Senate Bill 349.

Sincerely,

William Donald Schaefer

Governor

Senate Bill No. 349

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