Understanding dental insurance: DMOs vs. PPOs

Whether you’re reviewing the dental options for your employer-sponsored health plan or looking at the options available on the market, you may encounter the acronyms DMO and PPO (also known as a PDN), as well as indemnity plan, in your research.
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These terms describe the different types of dental insurance plans. To pick the best plan for your own needs, you'll need to know how each type is structured, and the advantages and disadvantages of each.

DMOs (Dental Maintenance Organization)

A DMO is very similar in concept to a health maintenance organization, or HMO.

Essentially, DMOs are designed to reduce premiums and costs - at the expense of a certain amount of freedom when it comes to choosing your own dentist.

Under these plans, when you want to receive dental services, you must choose a primary care dentist. If you need to see a specialist, such as an orthodontist or endodontist, you must get a referral from your primary care dentist.

Both HMOs and DMOs are designed to save money and reduce expenses by restricting the number of care providers the insurance company allows in the plan.

Negotiators for the insurer approach dentists and clinics in the coverage area and ask them to reduce prices in exchange for a steady flow of referrals from the plan. The fewer providers in the network, of course, the more patients each dentist will receive, and the more valuable the DMO is to the dentist.

They also save money by reducing expenses on specialists. The primary care dentist acts as a "gatekeeper" to more advanced services and ensures that any referrals to more advanced or specialized levels of care are legitimately medically necessary.

By using restricted networks, leveraging their bargaining power to obtain reduced fees, and reducing unnecessary expenses on specialist care, the DMO plan is usually able to realize significant cost savings - and pass those savings along to consumers in the form of reduced, affordable premiums.

These plans are usually best for those who are sensitive to premium costs and who are indifferent about what dentists they can see under the plan.

The dental PPO, aka PDN

A dental preferred provider organization (PPO) is much less restrictive than its DMO counterpart. You can generally visit any dentist you want who is willing to accept the insurance, and you don't need a referral to see a specialist.

However, there still may be a network, and your out-of-pocket costs may be lower if you see dentists from within these networks.

You will still have to pay deductibles and copays, but the plan may reduce or waive them for dentists and clinics within the preferred network.

These types of plans may also be referred to as participating dental networks, or PDNs. Their premiums are generally low, but usually not as low as comparable DMO plans.

Indemnity plans

If you have an indemnity plan, you can generally see any dentist who is willing to accept the insurance. You don't have to restrict yourself to practitioners in the network. If a dentist doesn't accept direct payment from the insurance company, they may reimburse you directly for covered expenses after the fact.

These plans offer the most flexibility and freedom and the fewest restrictions on care. But they also have the highest premiums.

What's the best dental insurance for you?

If choosing or having access to any dentist or specialist is important, an indemnity plan may be the best fit. 

DMOs generally offer the lowest monthly premiums and have low out-of-pocket costs for routine services like cleanings. But, their out-of-pocket costs may be higher for services beyond routine checkups and cleanings.

If extensive treatment or access to a specialist is needed, a PPO-type plan may be a good choice.

Our employee benefits advisors will help you sort through the available plans and make recommendations based on your needs and budget.