Legislation, report highlight need for dental plan transparency

A CDA-sponsored bill requiring standardized disclosures from dental plans is headed to the governor’s desk as a new journal paper highlights the need to establish greater transparency from dental plans to protect consumers.

The paper, which appears in the September issue of Health Affairs, was authored by Blue Sky Consulting Group and was based on analysis originally commissioned by CDA. The authors assess the case for a minimum dental loss ratio and identify the need for more research in order to determine what a fair DLR would be. Currently, no minimum standard exists for dental plans to spend a certain percentage of patient premiums directly on patient care.

The Health Affairs paper titled “Medical Loss Ratios for California’s Dental Insurance Plans: Assessing Consumer Value and Policy Solutions" found that a very low percentage of dental products are meeting the MLR thresholds set by the Affordable Care Act for medical insurance plans. The authors found that only 9 percent of dental products reported a DLR that would meet the ACA’s 85 percent threshold for large-group health products, and 80 percent for small-group and individual products. In addition, only 29 percent reached thresholds proposed in a recent California bill of 75 percent for large-group products and 70 percent for small-group and individual products.

Furthermore, the report found that 6.6 million Californians were covered by dental products that "would not meet the minimum [medical loss ratio] MLR standard required by the ACA for health plans."

The study's authors suggest that a legislatively mandated DLR would provide a standardized financial tool and potentially ensure better-value of dental care for consumers; however, establishing DLR thresholds poses challenges for stakeholders given differences in dental products and the number of people covered in them.

"This report highlights exactly what CDA has been advocating for through its legislative efforts,” said CDA President Natasha Lee, DDS. “Consumers deserve transparency when making choices about their dental plans."

CDA-sponsored Senate Bill 1008 (Skinner, D-Berkeley) passed the Assembly in late August after being approved by the Senate in late May. The bill supports patient choice of provider and helps level the playing field for providers and patients. It does this by standardizing disclosures for all dental benefit plans using a uniform Summary of Benefits and Coverage template, which will include plan details including covered services, reimbursement levels, estimated enrollee cost share, limitations and exceptions.

The bill follows legislation that CDA sponsored in 2014, also authored Nancy Skinner who was then an assemblymember. AB 1962 created a standardized requirement for dental plans to annually disclose to state regulators and the public their “loss ratio,” or how they spend patient premium dollars. In the three years since, dental plan reporting demonstrated a wide variation in DLR by product type and market, with some plans falling as low as 4 percent spent on patient care, raising significant questions about the consistency and value they provide to patients. In fact, the average dental DLR in 2014-15 in California was 61 percent, considerably lower than the 76 percent average reported nationwide.

Under the medical loss ratio that was established as part of the Affordable Care Act, all medical insurance plans are required to adhere to a 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 must spend 85 percent of all premium dollars on health care; 80 percent is required for small group and individual products. The MLR requirement ensures a minimum value for consumers and holds insurance companies accountable for how they are spending patients’ dollars.

The paper, “Medical Loss Ratios for California’s Dental Insurance Plans: Assessing Consumer Value and Policy Solutions,” appears in the September Health Affairs journal. (Access to the full article requires a subscription.)

Gov. Jerry Brown has until Sept. 30 to sign SB 1008 into law. CDA will update members about dental loss ratio advocacy efforts on cda.org and in an upcoming issue of the Update.

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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 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.