CDA legislation calls for more value, transparency, from dental plans

New legislation sponsored by CDA and introduced by Sen. Nancy Skinner (D-Berkeley) is working to increase value and transparency of dental benefit plans. Senate Bill 1008 calls for the establishment of a minimum dental loss ratio (DLR) for individual, small and large group dental benefit products and requires increased transparency for consumers who purchase dental savings or dental discount products by requiring standardized disclosures of what a dental benefit plan does or does not provide.

“With SB 1008, we will be able to work toward establishing a reasonable loss ratio for dental benefit plans and require greater plan transparency so consumers can make purchasing decisions knowing more about how their health care dollars are spent,” said CDA President Natasha Lee, DDS.

Under current law, all medical insurance plans must adhere to a “medical loss ratio” (MLR) standard requiring them to disclose how they spend insurance premium dollars and to spend a certain percentage directly on patient health care rather than administrative overhead and profits.

Medical plans for large groups (over 100 employees) must spend 85 percent of all premium dollars on health care; 80 percent is required for small group and individual products. This standard exists for all medical plans in the commercial market, while Medicaid managed care plans, including dental managed care plans, will be required to spend 85 percent in 2019.

The MLR requirement ensures a minimum value for consumers and holds insurance companies accountable for how they are spending patients’ dollars. However, there is currently no standard for assuring value in commercial dental benefit plans. To address this disparity, CDA in 2014 sponsored Assembly Bill 1962, also introduced by Skinner, an assemblymember at the time, to create a standardized requirement for dental plans to annually disclose to state regulators and the public how they spend patient premium dollars. After three years of reporting, the plan-reported data showed that too much of dental plan premiums are spent on overhead costs such as executive salaries and profits.

According to the data, there was a wide variation in dental loss ratios by product type and market with some plans falling as low as 4 percent spent on patient care. Only 15 percent of dental products achieved an MLR of 80 percent or more, while the average DLRs ranged from 52 percent for individual plans to 60 percent for small group plans and 70 percent for large group plans.

Under SB 1008, discount dental plans or discount savings plans would be excluded in the calculation of DLR to ensure a more accurate reflection of the dental plans’ expenditures on patient care. Dental plans would also be required to utilize a standardized and uniform Summary of Benefits and Coverage disclosure template that provides the DLR of the product, along with plan deductibles, annual maximums, common dental services, anticipated patient out-of-pocket costs, plan limitations, exceptions and other important information.

“CDA believes that patients deserve the same protections and value from their dental plans that they receive from their medical insurance plans,” said Lee. “If passed, SB 1008 would protect patients and move California further down that path.”

CDA will keep members up to date on the status of this legislation on cda.org and in the CDA Update.

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