CDA-sponsored legislation that would require dental plans be more transparent about how patient premium dollars are spent passed on the Assembly floor May 28 by a 76-0 vote.
AB 1962 (Skinner; D-Berkeley) would require dental plans to disclose information necessary to evaluate a dental plan’s costs of administering dental care coverage in comparison to amounts paid for patient care. The bill also sets up a process for establishing a medical loss ratio (MLR) for dental plans by 2018, which would require a certain percentage of patient premium revenue to go directly toward patient care.
CDA spent considerable time working with the Assembly Appropriations Committee to address concerns raised by the dental plan industry that establishing an 80 to 85 percent medical loss ratio (MLR) standard in law, as the legislation initially set out to do, would destabilize some dental plan markets and threaten the availability of low-cost plans.
Ultimately, not all of these concerns could be resolved, but the committee agreed to amendments that, while not creating an MLR standard at this time, would provide the information necessary to determine what MLR would be appropriate for dental plans. Because dental plans currently self-report without consistent standards to adhere to or disclosure of any of the detailed information necessary to verify loss ratios, there is a lack of reliable data for the state to develop an evidence-based MLR standard.
With these amendments, AB 1962 will:
- Require dental plans to uniformly and publicly disclose the financial data necessary to assess dental plans’ current loss ratios.
- Bring dental plan reporting to state regulators to the same level as is currently required for medical plans.
- Declare legislative intent to adopt formal MLR standards for dental plans effective Jan. 1, 2018.
“The critical value provided by AB 1962 has been increased transparency so we are pleased to see the bill move forward,” said CDA President James Stephens, DDS. “The bill achieves the goal that thorough information has to be disclosed. Additionally, with these amendments, disclosure will be done by plan product type, which is a huge opportunity for comparing the value of HMO products as compared to PPOs for patients.”
An MLR was included in the federal Affordable Care Act and then reinforced in state law for full-service health plans. Without such a requirement for dental plans, available data indicates that in California the amount of premium revenue allocated to actual dental care ranges from 38 to 81 percent, although currently, there is no easy way for patients or public policymakers to obtain that information.
In addition to Assemblymember Skinner who introduced AB 1962, the bill is co-authored by Assemblymembers Susan Bonilla (D – Concord), Rob Bonta (D – Alameda), Chris Holden (D – Pasadena), Richard Pan (D – Sacramento), Raul Bocanegra (D – Pacoima), Marie Waldron (R – Escondido), Brian Nestande (R – Palm Desert), Shirley Weber (D – San Diego), Sen. Tom Berryhill (R – Modesto) and Sen. Holly Mitchell (D – Los Angeles).
AB 1962 will now be heard in the Senate.