Something to smile about.

HumanaDental's growth over the past 25 years into one of the largest dental benefits plans in the country is giving the company something to smile about. Today, the dental insurance subsidiary of Humana Inc. serves more than 2.1 million members in the United States and Puerto Rico and boasts a preferred provider network of more than 52,000 dentists.

The Green Bay, Wis.-based company started in 1977 as Employers Health. In 2000, it bought Wisconsin National Life and renamed it HumanaDental Insurance Co., later moving all the business from Employers Health into the new company.

HumanaDental now contracts with dentists in all 50 states and the District of Columbia, establishing its most extensive network relationships in 24 states where the company maintains its largest business presence. The company recently added more than 5,000 dentist locations to its network on the heels of a nationwide campaign aimed at aggressively growing its network. Outreach included direct mail, personal contacts and educational seminars at several dental schools across the nation.

The company offers a host of dental products, including everything from capitated dental programs, or dental health maintenance organizations, to preferred provider organization products and standard indemnity programs. In addition, it offers discount or access programs for large employers, as well as voluntary and employer-sponsored plans. Products are distributed through three channels--Humana medical sales representatives, HumanaDental-only sales offices and wholesaling arrangements.

Since its early days, HumanaDental's book of business 1as focused primarily on the small group market--companies with fewer than 100 employees. Two years ago, however, when the company added its own sales offices and put dental sales consultants into the Humana markets, it began focusing more on the large-group sector. The company now serves a growing number of very large employers with thousands of employees, primarily on a serf-funded basis.

Not only is network and membership growth skyrocketing, but customer satisfaction is also at an all-time high, the company said. Recent satisfaction surveys of employers and agent/brokers found that nearly 90% of both groups said they agree or strongly agree that overall they are satisfied with HumanaDental.

The company experienced strong sales growth over the past five years, in excess of 20% annual compound growth, said Jerry Ganoni, president of HumanaDental. "We built the organization under a strong belief housed around service, and we've stuck to that ever since."

Customer retention is also a key driver of success. "We weren't founded on price. You can always compete on price and someone will always get lower than you, but once you have a customer and can maintain customer service, you will keep them," said Ganoni.

To prove its commitment to service, the organization offers various performance guarantees to some larger customers, paying a penalty if claims aren't paid within a certain time frame or customer service reps don't answer the phone within a certain amount of time. "In the past 26 ears, we've never once paid a penalty," said Ganoni.

Technology Here, Too

As with its parent organization, technology is a growing art of everyday life around HumanaDental. "We've done phenomenal things in developing our Web site and getting different types of technology on board to make customer service easier and meet customers anywhere they are on the service continuum," said Ganoni. "We have the advantage of being a child of a parent who's been spending a lot f time on technology, so we're grabbing on to that technology and advancing it in the dental community. "Through a secured member serf-service area on www.humanadental.com, consumers can check the status of a claim, enroll online, review benefits, locate participating dentists, request an ID card or find plan-specific answers to many common questions. Dentists or other dental care professionals can verify patient eligibility, confirm benefits or review the stares of a claim. Employers can download enrollment forms and find plan information, while agents can customize plan summaries and network directories for clients, learn more about voluntary rates and receive e-mailed quotes for small groups with fewer than 100 employees.

The organization also relies heavily on interactive voice recognition for interactions with dental offices. It developed a claims systems that has a 70% first-pass rate, something Ganoni believes is unheard of in the industry. "Seventy percent of claims go through about 257 edits and then are processed with no human intervention at all, which leads to incredible efficiencies," he said.

Ganoni sees several current trends developing in dental benefits. "As medical costs continue to escalate, it puts pressure on employers to find discretionary dollars for other benefits. And we're seeing more pressure on the dental side of the business to control costs by trying to control dental premiums and get employees to participate more on costs or design plans to allow more choices for employees at lower costs." To meet those needs, Humana incorporated dental benefits into its SmartSuite products to offer more employers and employees greater choice. SmartSuite is Humana's benefit option that offers a broad array of health plans with appropriate levels of cost sharing and allows employees to choose a plan that meets their individual health and budget needs.

In addition, employers are being crunched for money and are moving to lower-cost plans, such as 100-50-50 plans, in which 100% of preventive services, including oral exams, cleaning and X-rays, is covered once the deductible is met; 50% of basic services, such as routine extractions, composite fillings and emergency exams; and 50% of major treatment services, said Ganoni. "This, in turn, leads to more voluntary sales, primarily in the small group arena" In addition, many employers who previously offered employer-sponsored programs are also gravitating to voluntary programs.

Ganoni said the popularity of cosmetic services, such as teeth whitening and implants, is continuing to grow. While most policies don't currently cover these services, a growing number of employees are voicing a demand for such coverage. HumanaDental will be experimenting with a cosmetic rider to let people buy into those benefits.

"In addition, technology is advancing dentistry along," Ganoni said. HumanaDental is working with several dental schools, including Marquette University in Wisconsin and Baylor University in Texas, to educate dental students about insurance, claims filing and insurance practice guidelines. "Many students are taught about the technology of dentistry but not about the financial side, and that's what we are trying to teach theme," he said.

Going forward, Ganoni believes consumer-driven health plans and bundled options, (such as the company's SmartSuite products), that include dental benefits are the wave of the future. "As dental and medical costs continue to rise, we can pattern ourselves with what is happening in the industry and what we learn from the medical side. The dental industry has always been about five years behind the medical side, but I believe the dental industry will begin to move quickly to plans such as consumer-driven products, and in five years it will become common practice. Humana is positioning itself to play in that game."

While ancillary benefits make up a small portion of Humana's overall sales, dental sales continue to grow. Ganoni expects 2004 to be a slightly more profitable year than 2003. He doesn't anticipate the numbers to be as high as they were four years ago, however. "It's been more challenging from a sales and retention perspective this year, which we attribute to rising costs and employers searching for discretionary dollars. However, we have to work harder to maintain the business than we've had in the past and we're making inroads and holding our own." He terms growth on the new sales side as "carrier insanity. "As medical carriers face higher increases and seek alternative solutions, many are getting into the dental line of business and are doing all kinds of things to retain customers, he said, adding that pricing components are driven down as a result.