The National Association of Dental Plans (NADP) and the American Dental Association (ADA) have reached a compromise after a year of negotiation over a long-standing policy battle over how dental plans should be regulated in states. The result is model legislation for states to use, but the Connecticut State Dental Association (CDSA) says they don’t believe it is right for Connecticut.
Medical plans are subject to a medical loss ratio (MLR) between 80 and 85 percent under the Affordable Care Act (ACA), meaning that 85 percent of premiums must be spent on medical care. If they don’t spend at least 80 to 85 percent of premium money on care, the plan may be required to reduce their premium or issue rebates to consumers.
Dental plans in most states, including Connecticut, have no such requirement and advocates argue that dental plans are taking in much more money than they are spending on dental care and that money could be returned to consumers through lowered premiums or rebates.
MLR comes up frequently during discussions on how to lower medical insurance costs, less frequently for dental plans, which are much smaller and less costly. States like Massachusetts have passed legislation regarding MLR for dental plans and the state is reportedly working through the regulatory framework to enact it.
The model legislation, a compromise between the NADP and ADA, was approved by the National Council of Insurance Legislators (NCOIL) and is meant to be a framework for states looking to implement Dental Loss Ratios (DLR) for dental plans. The legislation would apply only to small, state-regulated plans. Large, self-insured plans are regulated at the federal level through ERISA.
Under the model framework, dental plans would have to submit an annual report to the state insurance commissioner and plans that had a DLR of 1 percent standard deviation from the average DLR for all dental plans would be investigated and possibly hit with enforcement actions, including rebates to premium-payers. Averages would be determined over the course of years.
NADP Executive Director Mike Adelberg, who has been critical of states like Massachusetts that moved forward with DLRs that align closely with medical loss ratios, said in a press release the resulting model legislation “is proof that when acting in good faith with the ADA, that two organizations with different views can reach a reasonable compromise.”
Kathlene Gerrity, executive director of the CSDA, doesn’t believe the model is right for Connecticut, saying it is useful for states that don’t already have a framework for DLR. She says CSDA has been working with lawmakers and already have the framework for Connecticut’s legislation in place.
“The important thing to realize is that this is model language for legislation in states that don’t already have a vehicle. If a state hasn’t put forward a draft or passed legislation, this is a starting point,” Gerrity said. “What we’ve asked our legislature to do is to create something that is going to fit the marketplace in Connecticut and so it’s different.”
Gerrity says the model legislation is confusing and not transparent for consumers, and CSDA are pushing for an 85 percent DLR, meaning that 85 cents of every dental premium dollar goes toward dental care. The organization has been working with lawmakers on the Insurance and Real Estate Committee to get a bill presented in the next session.
“What we really want is something that’s very transparent to the consumer,” Gerrity said, adding that under the model legislation, consumers would have to wait years before they would potentially see a reduction in their premiums or rebate, and that using an 85 percent DLR is much simpler and quicker. “It already exists in the medical world, so this is just parity for the dental insurance side.”
“If you can do it for your medical side, you can certainly do it for this little piece of the pie over here that is dental,” Gerrity said.
That “tiny piece of the pie,” however, is part of the problem with high percentage DLRs, according to NADP Executive Director Adelberg in a previous interview with CII. The NADP argues that dental premiums are much smaller than medical premiums, but dental insurance plans still have the same administrative costs, so implementing a high DLR for dental plans would drive up the premiums.
“The compromise reached at NCOIL by ADA and NADP represents a reasonable middle-ground approach that is an opportunity to have increased regulation of dental plans while respecting the realities of the dental insurance market and financials,” Adelberg said when reached for comment for this article.
In their press release the NADP specifically mentioned Massachusetts, which passed its 83 percent DLR through a state referendum in 2022, saying Massachusetts, “arbitrarily set a loss ratio for dental plans at the same level that exists for medical plans that operate on a completely different scale and delivery model,” and that five dental insurers left the small insurer market because of the DLR.
“There have been some very small market providers up there who have announced that they’ll be leaving but there’s also several much larger plans, who, my understanding is, have petitioned to start being able to provide in Massachusetts,” Gerrity said. “I think that it’s a free market and it’s going to shake out and anytime there’s changes to anything you’ll have people who say our business model can’t accommodate that, we’re out, or this is a great a great opportunity for us, let’s move into that market.”
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Is there nothing that the state considers off limits for regulation? Since when are dental plans considered to be too expensive? The free market dictates who an employer chooses as their dental carrier & decisions like service & network are shopped and evaluated for value. All consumers use their dental plans, not all use their medical plans annually. Further, many employers give employees tax favored HSA/HRA dollars that can be used for unreimbursed dental expenses. Regulation of dental plans will merely add more cost. This is a silly waste of time and energy.
This is detrimental to the patient and dentist. Delta Dental spent 177 million on patient care and donated 291 million to the Catalyst Institute in 2019. This legislation creates a loophole for insurance companies to exclude non-profit donations into the 80-85% – where they spend a majority of their money already. They will continue to take money from providers and patients.