A History of Erosion at WDS - Dexter E. Barnes, DDS
About 1985, WDS let it be known that they were creating a capitation dental plan at the request of Boeing. There was a lot of protest raised at the informational meeting by providers, but WDS continued forward and the capitation plan still exists as an option — but it only represents a small portion of the WDS book of businesses.
1989, the WDS Board approved the “average cost per patient” (ACP) policy that identified a small number of providers referred to as “outliers,” due to the fact that the treatment they were providing — when averaged out over all their WDS patients — was higher in cost, and consisted of a significantly larger number of certain types of procedures. The procedures they were primarily identifying were cast inlays, onlays, crowns, pulp caps, and non-surgical periodontal therapies such as root planing, curettage and difficult prophies.
These “outliers” were then required to submit pre-treatment plans for every WDS patient, and most, if not all, of these patients were required to visit a WDS-selected dentist for a treatment plan review and second opinion. These patients were notified of this requirement via a letter from WDS.
A small group of dentists gathered together and decided to create a written petition request for a “special meeting” as was, and still is, allowed under WDS bylaws if you gather signatures of 10 percent of all the provider dentists. The signature gathering was successful, and the special meeting was held live in Seattle and broadcast via satellite in Spokane and Vancouver, Wash. After about 90 minutes of rather well-presented, emotional discussion outlining the unfairness and poorly documented justification for this policy, the board reversed their decision and remanded the ACP policy. Later one ACP provider sued WDS and won a significant settlement, others decided to try to prevent this type of action by getting elected as Trustees and then to the Board of Directors.
In 1993, WDS created a secondary discounted PPO plan for the State of Washington employees. This plan was designed to set the reimbursement levels at an average of the 50th percentile of fees for each procedure statewide, eliminating the zip code or regional fee profiles then being used for the primary PPO plan. This plan was so unpopular that only about 75 percent of the providers signed on at first and the numbers have grown from there. This was the first indicator that WDS could cut the reimbursement levels and still have a more than adequate provider panel. Thus, the second division of dentists into sub groups was accomplished.
There is no better strategy than winning by dividing up your opponent.
In 1994, the dentists on the board were asked to design some cost-containment ideas that they would support, rather than just keeping quiet until the company wasted a lot of time and energy designing plans they would vote down. At that time, dentists out-numbered the non-dentists on the board by nine to six. The dentists agreed to support a cost of living ceiling to annual fee increases in return for:
1. An on-going series of business management courses provided by outside experts that would help the providers improve the efficiency and decrease the overhead, thereby improving the bottom line of their practices,
2. A commitment to not offer the “State PPO” program, now known as the Delta Dental PPO Program, to any other employer – purchaser.
The intent was to not restrict the inflation of fees for this program and thus let it slowly lose its cost advantage so that all providers would still be in one large preferred provider pot.
After being told that too much discussion, hand holding and kissing had already occurred between the State of Washington and WDS — implying a positive intention that made it awkward to back out — the Board voted to create the State Employees Discounted PPO plan, but with considerable dissension and some negative votes.
In 1995 Boeing requested that they be allowed to purchase the Discounted State PPO Plan as an option. Because of the “awkward position” WDS created with State Employees plan (see above); any discussion with Boeing was forbidden until a Board vote. When the Boeing request vote was brought to the Board it was presented as a “crisis” because Boeing was in the final stages of negotiation with their unions and of course they could and would shop for another insurer if they weren’t give the discounted PPO option. WDS, much like our national government, “doesn’t like to waste a good crisis.” After a half-day of emotional discussion, what started out as a seven-to-seven split on the board (one public member was absent), a vote to not only approve giving Boeing the State Discount PPO option but to also install the cost of living ceiling on the other PPO ended up 11 to 2 with only two dentist voting no). So much for believing that people hold philosophical positions and vote their beliefs.
You could feel the train a-coming.
In about 1999 or 2000, there was a proposed bylaws change to adjust the make-up of the board from nine dentists and six non-dentists, to an equal number of dentists and non-dentists “so that WDS was in conformity with the IRS regulation.” I believe the proposal was intended to change how Trustees were elected, eliminating the election by the various components, and changing all the Trustees to open position election. These changes were passed by a substantial majority of the providers in spite of a valiant attempt by a very small number of dedicated, concerned dentists.
In December 2008, additional by-law changes were requested, basically eliminating the trustees and their nomination of dentists for the board and putting the nomination of dentist board candidates in the hands of the board, or some would say “The Company.” The changes passed easily because the voices of opposition had long since given up trying to rally other providers.
The train is fast approaching!
This past January, changes to the by-laws were again requested, based on being in compliance with federal regulation, changing the composition and size of the board. It would now be made up of member directors (members of the WDS Corporation) one ex-officio director who is the CEO and President of WDS, and “Independent” Directors who;
1. Must satisfy the definition for an “independent” member of a governing body set forth in the instructions to the IRS service Form 990 (as it may be amended from time to time) or such other IRS definition of independence as Delta Dental Plans Association may from time to time reference in connection with it membership standards,
2. Not be the president and CEO or otherwise and employee of the corporation,
3. Not be a member of the corporation, nor and individual with DDS of DMD degree,
4. Not have a financial interest in any dental organization.
WDS says these bylaws changes passed by about an 80/20 split.
There is no way to avoid the train wreck now!!
On April 4, 2011, the train arrived. After two years of allowing no increase in fees, WDS informed its dental providers that in order for it to survive and continue to make you rich by providing patients for you, it is going to have to unilaterally lower your fees by 14-22 percent. During the past two years, I’m sure that you have seen an equal discount in your overhead, such as dental supplies, lab fees, rent and salaries. Even though the cost of living index as gone up, there is no concern by you about possible hyper inflation caused by the printing presses at the Federal Reserve, so you should, “just smile and say thank you for caring so much about me.”
Or maybe you should join in with others and call for a special meeting. This is still allowed under the bylaws through a petition signed by 10 percent of the members of the corporation. Any such petition must contain a description of the item or items to be discussed at that meeting. Somebody needs to get a small group together and carefully construct such a petition in time to gather signatures possibly at the PNDC meeting.
I hope this gives everyone a little history lesson about how things got to this point.
“We have seen the enemy and he is US!!” Too bad we couldn’t see this sooner.
-Dexter E. Barnes, DDS