3 Key Challenges Facing Tele-dentistry Companies and How to Approach Them
Dentistry is one of a number of clinical specialties that is taking a creative and innovative approach to delivering care using digital health tools.
Most of us are now familiar with Byte, SmileDirectClub, and Candid—these companies are pioneers in the space. However, tele-dentistry has far more potential applications than retail clear aligner services.
Tele-dentistry entrepreneurs are building solutions for remote examination of sore or swollen teeth and gums, screening for certain oral diseases and cancers, mobile dental hygiene, dental hygiene education, and more.
Nearly a quarter of the US population lacks dental coverage, and it is well established that poor dental hygiene can lead to painful and lifelong oral health issues, as well as serious conditions such as heart disease and stroke.
So, why are the leading companies in the space so focused on cosmetic applications?
Unfortunately, as is often the case at the leading edge, law and policy haven’t quite caught up.
In this article, we’ll discuss a number of challenges for tele-dentistry innovators and provide some guidance on how to successfully navigate them to expand your tele-dentistry company.
#1: Navigating Corporate Practice of Dentistry Restrictions
A threshold consideration for new tele-dentistry companies is where they intend to launch. Some companies want to target national implementation, while others want to focus in one state, region, or other discrete geographic market.
Laws regarding who can own a tele-dentistry company (called “Corporate Practice of Dentistry (CPOD)” laws) differ state by state, and impact how you can lawfully structure your tele-dentistry business. In states with CPOD laws, for example, if you’re not a dentist or orthodontist, it is unlawful for you to own a dentistry practice.
If you intend to expand to multiple states, or to launch in a CPOD state where you are not licensed, you’ll need to form multiple companies to operate your tele-dentistry business in a compliant manner. This is called the “Friendly PC” model, and we’ll write about this in our next article in the series. (Click here for a crash course on the MSO Friendly PC model)
Note that not all states have a CPOD laws, so some companies choose to launch their pilot in these states to test the model before expanding. This can reduce costs significantly while the company proves its model.
CPOD violations carry serious penalties and risks. In recent years, a major medical center faced claims of insurance fraud and were forced to pay a fine of over 4 million dollars due to CPOD violations. For smaller companies that are just starting up and may not have the capital to cushion these losses, enforcement penalties may be enough to sink the business.
Takeaway: Before you launch, consider which markets you want to launch in, as well as future expansion plans.
#2: Leveraging Dental Hygienists and Dental Assistants
After deciding where to develop your business and what corporate ownership structure to utilize, the next step is to build up a workforce.
Dental healthcare professionals are in high demand and short supply, so building a high-quality workforce can be difficult.
One option to improve your bottom line and your ability to hire enough staff to meet demand is expanding your pool of applicants to mid-level professionals such as dental hygienists and dental assistants. Rules differ for each type of dental mid-level, and they vary by state.
Location is Key
The location you choose to set up your practice significantly impacts your ability to leverage ancillary staff because licensure rules and scope of practice laws regarding supervision of tele-dentistry services vary significantly across states.
For example, some states like New York allow dental hygienists to work under “general supervision,” meaning they do not require the onsite presence of a dentist in a practice to provide services. Others prohibit remote supervision of hygienists. A few states require dental hygienists to sign collaborative practice agreements to specifically define their scope of practice and service offerings before practicing independently. Some states also allow the use of dental assistants to help provide tele-dentistry services under general supervision, while other states require direct, on-site supervision from a dentist or orthodontist.
Service Type Matters
It is important to be aware of differences in scope of practice and licensure requirements if you are planning to utilize ancillary dental staff in your tele-dentistry practice.
Dental hygienists must be licensed in the state in which their patient is located, but dental assistants’ licensure requirements are much less stringent. Some don’t even require that dental assistants have formal education in dentistry, instead prioritizing on-the-job training. Other states require dental assistants to gain special certification or vocational training from an accredited organization in order to practice.
Hygienists typically have a broader scope of practice than dental assistants, and their tasks often include more direct clinical care like conducting teeth cleanings, performing dental health examinations and educating patients on oral health best practices. Their reimbursement rates are also higher.
Dental assistants typically assist more with administrative clinical work including appointment scheduling and sterilizing examination equipment, but some states also allow dental assistants to perform basic dental procedures in a limited capacity.
Takeaway: Leveraging dental assistants and hygienists can be a cost effective and efficient way to quickly expand and scale your business despite a low supply of licensed dentists or orthodontists. Staffing flexibilities and scope of practice laws vary significantly across states so it is crucial to understand your market, licensure regulations, and scope of professional practice laws in order to build a compliant tele-dentistry staffing model.
#3: Establishing the Right Reimbursement Mechanism for your Business
For private (cash) pay tele-dentistry businesses, building your revenue model is fairly straightforward—you set a price and the consumer pays it. If, instead, you plan to contract with payors to reimburse for your tele-dentistry services, it is a bit more complex. Reimbursement for tele-dentistry is regulated on a state-by-state basis, with some states having a more robust regulatory framework than others.
Important issues to consider under the reimbursement umbrella include:
Whether tele-dentistry services can be reimbursed by insurance;
What types of tele-dentistry services are reimbursable; and
Whether there is payment parity with traditional dental services.
Traditional Insurance Reimbursement
Some states like California and Colorado offer payment parity laws mandating commercial payers and Medicaid to reimburse for telehealth services at a rate equivalent to in-person rates. However, a few states like Florida and North Carolina provide no such parity laws, which can lead to reimbursement at significantly lower rates when compared to in-person services. In some states, certain tele-dentistry services may not be reimbursable at all.
Although adoption of tele-dentistry reimbursement by insurers is on the rise, there may still be significant push back from insurers hesitant to pay for these remote services.
Cash Pay Companies
Insurance is certainly not the only avenue for reimbursement, especially when considering the significant population of individuals in the US not covered by dental insurance. A direct to consumer cash-pay model can be lucrative, but it is important to tread carefully with how you price services to maintain the balance of increasing access to dental care without pricing out your target patient population.
Takeaway: Whether your business chooses to seek reimbursement from payors or you are contemplating a fully cash pay business model – there are a number of factors you need to consider. For example, if your reimbursement scheme includes any improper referral arrangements or your staff is not properly licensed, your business can be at risk for potential anti-kickback statute (AKS) and false claims act (FCA) violations. Look out for our next article in the series on tele-dentistry and fraud and abuse considerations.
Facing these challenges
Tele-dentistry is relatively early in its adoption and application, which means the legal landscape for this type of work is constantly evolving. Whether you are focused on learning how to expand your existing business in a compliant manner or just trying to get your foot in the door of the tele-dentistry industry, our healthcare innovation attorneys are poised to help.
Here at Nixon Gwilt Law, we regularly partner with clients to help them navigate these business challenges and arm them with the proper tools needed to succeed in this industry. If this sounds like something you’d like to explore, then we’d be happy to share how we help clients like you navigate this field, expand to new markets, and maintain compliance with relevant regulations. Click the blue button below to start the conversation.