CDA-sponsored bills seek more protections, increased oversight of dental insurance

Bills would prohibit plans from imposing arbitrary waiting periods, denying coverage for preexisting conditions; require rate review and ERISA notice
February 23, 2023
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Quick Summary:
The bills follow several successful pieces of legislation sponsored by CDA in recent years to improve dental plans and address the fact that dental plans still lack key consumer protections and adequate oversight, even as medical plans must comply with federal and state rules that protect patients from unjustified premium rate changes, arbitrary waiting periods before full benefits can be used and denial of coverage due to preexisting conditions, for example. Read what the bills would do.

Two CDA-sponsored bills introduced this month, including one authored by Assemblymember Jim Wood, DDS, continue CDA’s legislative efforts to hold dental insurance plans accountable and move toward more meaningful dental coverage.

The bills address the fact that dental plans still lack key consumer protections and adequate oversight, even as medical plans must comply with federal and state rules that protect patients from unjustified premium rate changes, arbitrary waiting periods before full benefits can be used and denial of coverage due to preexisting conditions, for example.

“Holding plans accountable to their contracts only goes so far if the coverage and value aren’t in those contracts to start,” said CDA President John Blake, DDS. “Exemptions and loopholes have allowed dental plans to continue operating in a ‘wild west’ environment with little oversight or regulation to ensure they provide a meaningful benefit to consumers. As we continue to move the needle on increasing access to care, now is the time to tame the wild west — and demanding accountability through these two bills is the best place to start.”

Eliminate loopholes that deny coverage and increase out-of-pocket costs

AB 1048 by Assemblymember Buffy Wicks (D-Oakland) would bring some of the important protections to dental insurance plans that the Affordable Care Act brought to health insurance plans and eliminate the loopholes that deny patients coverage and lead to increased out-of-pocket costs.

Specifically, the bill would:

  • Prohibit dental benefit plans from imposing arbitrary waiting periods before patients can access their full benefits.
  • Prohibit dental benefit plans from denying claims related to a patient’s preexisting dental conditions.
  • Require state review of dental plan premium rates to protect consumers from unreasonable or unjustified rates.

Currently, arbitrary waiting periods like those required by some commercial dental plans can range from three months to a year and limit patients’ ability to access major services like a root canal or a crown, even when it is clinically necessary.

Services related to missing teeth or cleft palate should not be denied

While the ACA banned waiting periods and removed the preexisting conditions clause to ensure patients have full and unencumbered use of their medical benefits, dental benefit plans operate under no such clause; instead, they can freely impose waiting periods for needed dental treatment or deny payment for services related to preexisting dental conditions. Common examples are a “missing tooth” clause for a tooth lost prior to starting dental coverage or dental treatment related to a genetic condition like a cleft palate.

“Ensuring these basic patient protections in dental plans will benefit patients in need and ensure that consumers who are paying premiums have timely access to dental care,” Dr. Blake added.

Further, by requiring dental benefit plans to undergo a review of their premium rates by the respective state regulator — either the California Department of Insurance or the Department of Managed Health Care — would give the state greater insight into how the plans are setting or changing rates, which in turn would protect consumers from unreasonable or unjustified rates.

Recent reports of health care spending show that out-of-pocket expenses for dental services grew by 16% in 2021, and a new California Health Care Foundation survey found that 38% of Californians have a family member who skipped dental care last year due to cost. The bill would allow greater oversight to ensure consumers are receiving value for their dental premiums.

These changes would ensure state-regulated dental benefit plans work for patients and dentists, but that still leaves protection loopholes in self-funded ERISA plans for which states, including California, do not have the authority to regulate. Here is where the second CDA-sponsored bill comes in.

Take the difficulty out of the ERISA plan billing process

Most dental benefit plans are “fully insured” and regulated at the state level by the Department of Managed Health Care or the California Department of Insurance. Fully insured plans must comply with all California’s rules and regulations; however, some employers offer self-insured plans. These plans are regulated at the federal level in accordance with the Employee Retirement Income Security Act of 1974, known as ERISA, and are exempt from state level rules and regulations.

An estimated 40% of Californians are enrolled in “self-insured” dental benefit plans, which are exempt from state laws and regulations. The differences between California-regulated and federally regulated plans can be extensive, and because ERISA plans are not required to comply with California’s laws, the billing process can be difficult and frustrating for patients and providers alike.

Still, measures can be put in place at the state level to increase plan transparency and provide patient protections.

AB 952 by Assemblymember Jim Wood (D-Healdsburg), DDS, would put two such measures in place. It would:

  • Require, at the time of a provider determining a patient’s eligibility and benefit determination, dental insurance plans to disclose whether the enrollee’s plan is subject to state (DMHC or CDI) or federal (ERISA) regulations.
  • Require that any membership card, coverage card or other documentation issued by the dental plan to the enrollee include whether the enrollee’s plan is subject to state or federal regulation.

“It is vital for patients and providers to be aware of which laws apply to a patient’s dental plan,” said Asm. Wood. “What we have now instead is a profound lack of clarity about the standards the plans must meet and where patients and dentists can go to resolve a conflict with a plan. The ERISA notification will provide that clarity for the millions of Californians enrolled in these plans and will help alleviate confounding billing processes for dental offices too.”

Building on multi-year advocacy progress

These bills follow several successful pieces of legislation sponsored by CDA in recent years to improve dental plans.

One of the more recent was Assembly Bill 954, also authored by Asm. Wood, which took effect in 2020 and requires dental plans to be more transparent about dental network leasing.

CDA-sponsored Senate Bill 1008 passed in 2018 and increased transparency by requiring plans to use a uniform matrix to disclose their benefits, including covered services, reimbursement levels, estimated enrollee cost sharing, limitations and exceptions. While the regulatory process was delayed by the COVID-19 pandemic, as of this year, dental plans are required to provide this standardized information, both to educate their enrollees and allow consumers to make valid comparisons of plans.

CDA was also behind the first bill in California and the country to require dental plans to file a standardized annual medical loss ratio (MLR) report to help patients understand the value of their dental plans (how much of premium revenue is actually spent on patient care as opposed to administrative overhead costs and plan profits).

The MLR information collected through CDA’s sponsored bills has provided strong validation of the lack of value in dental plans and continues to bolster CDA’s ongoing advocacy on dental insurance. As part of this work, CDA will be monitoring the implementation and effectiveness of a new law in Massachusetts establishing an MLR requirement for dental plans.

“CDA has a long history in support of MLR policy as a part of creating more standardized requirements for dental plans that give people more meaningful coverage,” Dr. Blake said. “There is currently no floor to the plans and benefits sold by dental insurance companies. An MLR requirement will ultimately be most valuable to patients and dentists when paired with other reforms that establish an adequate floor. CDA will continue to be strategic and thoughtful as we pursue the many reforms needed to make dental insurance a quality product long-term.”

All this work complements CDA’s legal challenge to Delta Dental of California’s adjustments to Premier and PPO provider agreements that took effect Jan. 1.

CDA will provide updates on the bills and legal challenge in the newsroom and in the weekly member newsletter, Inside California Dentistry.

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