Dental Insurers Invest in Tech Firm

Seeking a solution for electronic transmission of dental insurance transactions, a consortium of six major dental insurers and plan administrators have invested in an Irvine, CA-based technology company, Dental Connect, Inc. Together, the roughly equal contributions of Aetna (Hartford), Ameritas Life Insurance Co. (Lincoln, NE), Delta Dental Plan of Michigan (Okemos, MI), The Guardian Life Insurance Co. of America (New York), MetLife (New York) and Dental Benefit Providers (Bethesda, MD)constitute a controlling interest in the company.

What the investing parties have called a "cooperative technology venture" sprang from discussions at a meeting at the National Association of Dental Plans (NADP, Dallas) in spring of 2001, according to Todd Katz, vice president, MetLife Dental (MetDental). While the NADP is not involved in the endeavor as an organization, according to Katz, members "got together with a mission to come up with a solution to drive connectivity between dental offices and insurance companies for the core dental insurance transactions, which include claims submission, eligibility and benefit verification and EOB statement processing," he says. "Our target was to reach about 80 percent electronic usage."

In search of a solution, the consortium hired Pricewaterhouse-Coopers (New York) to conduct qualitative and quantitative research, including interviews with dentists and dental office staff nationwide.

"After that research, the companies came together and came up with a prototype and business model, and then had to decide what technology to use, whether it would be building it, buying it or partnering with an existing firm," Katz relates.

MetDental had been independently working on building out electronic transactions, and rolled out claim intake functionality in November 2001 as the result of a partnership with Dental Connect. "It allowed dentists to electronically submit claims for free, for all insurance companies. However, Dental Connect was only connected to MetLife's back-end systems," Katz explains. "We recognized that to make this successful it really had to be multi-payor in nature, and that's exactly what our research, and that of the NADP-affiliated partner firms told us."

Acting on that conviction, the group decided to invest in Dental Connect to further build out the solution, and to allow multi-payor connectivity on the back end directly with Dental Connect, according to Katz, who explains that the final number of consortium members was limited to those willing or able to fund the research, and to invest. "By the end of the first quarter, all of the investors will be hooked into that pipe, and we expect throughout 2003 that Dental Connect will look to develop relationships with the rest of the payor community and as many dentists as possible."

Open Exchange

The ultimate goal, says Katz, "is to make this an open system. Any payor that wants to connect is more than welcome to. In fact, we think that's the key criterion to making this successful."

The benefit to providers will be that "service that has historically carried high margins and low levels of service is now free to the dentist as an open exchange," says Michael Byrnes, vice president, Dental Connect.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio