CDA sponsored bill requires minimum loss ratio for dental plans

CDA is sponsoring legislation to apply key patient protections and market reforms, including a minimum loss ratio on patient premiums, to dental plans participating in California’s new health plan marketplace, the Covered California health benefit exchange.

The Affordable Care Act (ACA) includes many consumer-focused provisions that have already gone into effect, but that only apply to medical plans. Assemblymember Dr. Richard Pan (D-Sacramento), who chairs the Assembly Health Committee, has introduced AB 18, sponsored by CDA, that if passed by the legislature and signed by the Governor, would represent the first time these federal patient protections would be applied to dental plans participating in the small group market inside and outside the new health benefit exchange created by ACA. 

One of the most critical provisions would be establishing a Dental Loss Ratio (DLR), or a medical loss ratio to dental plans offering products in the Exchange. A DLR would require a minimum percentage of a dental plan’s gross premium collections to be spent on actual treatment and care.   In other words, the bill limits the amount of premium collections that can be applied to the plan’s administration of the benefit (less taxes and fees).  If the plan fails to do so, the plan must reimburse each policyholder. The proposed DLR percentage is still being determined in consultation with legislative committee analysts, Covered California, and the Department of Managed Health Care.

“This ground breaking piece of legislation, if it becomes law, would for the first time in California ensure that commercial dental plans are held accountable to consumers for the amount of patient dollars they collect that are put to care,” said CDA President Lindsey Robinson, DDS. “It is only fair that dental plans are held to the same administrative and consumer protections as their health plan counterparts.”

A minimum loss ratio for medical plans was created with the passage of the ACA in 2010, which requires such plans to allocate at least 80-85 percent of the premium revenue to actual patient care.  Pursuant to federal law, if care does not reach the 80-85 percent threshold, each plan must provide rebates to their consumers. Last year, the U.S. Department of Health and Human Services reported that health plans paid out in MLR rebates $1.1 billion to 12.8 million policyholders.

AB 18 was originally introduced at the request of CDA and other dental stakeholders to make critical and time sensitive corrections to current state law surrounding implementation of the ACA.  In addition to these consumer protections, the bill also includes language to ensure that California’s Exchange is a robust, competitive marketplace for dental benefits, and consumers are provided with a transparent set of options for choosing their dentist when purchasing dental coverage for their families.

“CDA is also pleased to support other key provisions of the legislation that would apply certain additional market reform provisions to dental plans that currently only apply to health plans.  These include provider network adequacy requirements, timely access to care standards, prohibition on annual and lifetime caps on services, and premium rate review by regulators,” Robinson said.

CDA is actively working to support this legislation and will continue to keep members informed as it progresses through the legislative process. 

For more information about CDA’s advocacy efforts, visit http://www.cda.org/advocacy.