An audit approved unanimously by the California Legislature’s audit committee will evaluate how the state procures dental coverage for its 600,000 employees, retirees and dependents with a specific evaluation of the Department of Human Resources’ current contract with Delta Dental.
CalHR has contracted exclusively with Delta Dental of California, the largest insurer in the state and one of the largest nationwide, to provide dental benefits coverage for the state’s employees since 1984, yet concerns about cost, competition and access are increasing.
Sen. Dave Cortese (D-San Jose) proposed the audit in the committee’s June 1 hearing stating that despite decades of inflation and recent hikes in healthcare costs, Delta Dental’s maximum benefit amount for services has remained at just $2,000 on certain plans for over 40 years. CDA has been collaborating with Sen. Cortese and strongly supports the audit.
State employees, retirees struggling with inadequate coverage for dental treatment
As noted in the audit request, more state employees are reporting that their dentist is no longer in network with Delta Dental, confirming that more dentists are finding their contracts with Delta Dental unsustainable. Simultaneously, retired state employees are reporting difficulties using the dental benefits they still earn as part of their total compensation package because the coverage is inadequate for their needs.
“Retirees, who are on fixed incomes and often require more extensive dental work, are paying tens of thousands of dollars out-of-pocket for critical operations or avoiding oral care altogether,” Cortese said at the hearing.
CDA, representing its 27,000-plus member-dentists and their patients, the California State Retirees organization, as well as Sen. Christopher Cabaldon (D-Yolo), Sen. Brian Jones (R-San Diego) and Assemblymember Rhodesia Ransom (D-Stockton), all spoke in favor of the audit.
Objective: Understand employees’ limitations using their Delta Dental benefit
The audit’s primary objectives are:
- Review and evaluate CalHR’s policies, procedures and processes for procuring dental insurance plan contracts, including processes for soliciting and reviewing bids from prospective companies and promoting fair and competitive procurements.
- Assess CalHR’s process for determining industry standards for pricing and options of care, including how it determines the reasonableness of annual maximums.
- Review available data from the last five years to identify information related to active state employees and retirees’ use of their Delta Dental plan coverage, average out-of-pocket expense, dentists’ reasons for leaving Delta Dental and whether Delta Dental offered remedies to the providers.
- Evaluate CalHR’s oversight of its current contracts with dental insurance companies.
- Evaluate CalHR’s current dental insurance benefit contract with Delta Dental.
As part of objective 5, the audit will seek to learn whether CalHR has renegotiated or plans to renegotiate any terms of its contract with Delta Dental to address the changing needs of beneficiaries—the state’s 600,000 employees, retirees and plan dependents.
The audit will also attempt to determine whether Delta Dental’s employee salaries have changed during the last five years and, if so, whether such changes directly affected benefit options, availability of in-network providers and the price of contracting with CalHR and whether Delta Dental’s pricing and provider reimbursement rates are comparable with those of other dental insurance providers.
At the June 1 hearing, CalHR disclosed that in 2027 it would offer state employees and retirees a second dental plan option, through MetLife, for the first time since 1984.
Audit continues scrutiny of dental plans’ lack of value, transparency
The audit will help the Legislature understand why so many state employees and retirees “are experiencing such great difficulties in finding and keeping dentists and utilizing their hard-earned dental benefits,” Cortese told the committee.
Sen. Jones shared that his dentist of many years, who had been in contract with Delta Dental throughout, dropped Delta Dental just this year.
“My dentist is a very good dentist and highly respected in the community,” Jones said. I’m now stuck in that fun effort of finding a new dentist … I’m going to support the audit. I think it’s good information for the state’s employees to have.”
The audit was estimated to take 4,200 hours to complete, so audit findings may not be available until late 2027. Once available, CDA will share them along with any actions the Legislature recommends CalHR take to ensure its dental benefits procurement process is, or remains, transparent, competitive and cost-effective.
CDA-sponsored bill addresses dental plan networks’ inability to meet enrollees’ needs
CDA-sponsored Assembly Bill 1629, introduced this year, addresses the growing inadequacy of dental plan networks to meet enrollees’ needs by: (1) Requiring dental insurance companies to report provider network information to the state for all dental plans they sell; and (2) Requiring all dental plans to honor patients’ assignment of benefits requests.
The bill recently passed in the Assembly with zero “no” votes and is under consideration in the State Senate.