NCOIL ponders dental MLR model to force set spending on patient care

Legislation to hold dental providers to a minimum expenditure of funds on patient care is either a big win for consumers and their smiles, or a crushing mandate that is driving providers from the market.

Either way, the legislative idea is gaining enough momentum that state insurance regulators are working on a medical-loss ratio model law for dental providers. A National Council of Insurance Legislators committee held a call Friday to discuss the merits of language found in a new Colorado law signed by Gov. Jared Polis in June.

"Instead of requiring a [dental-loss ratio] and setting forth specific percentage, Colorado took the approach of requiring carriers to submit a DLR information to the commissioner," explained Del. Steve Westfall, R-W.V. "After two years, the commissioner is required to issue rules to calculate an average DLR, verify any specific carriers that deviate from the coverage DLR, and investigate the cause of the deviation."

The Colorado law is very different from what passed via referendum in Massachusetts, where 72% of voters adopted MLRs for dental plans in the state. Supporters said it was a huge victory for consumers that would guarantee their premiums would be mostly spent on care.

The American Dental Association hailed the ballot victory and said the move to bring dental plans in line with health care plans with MLRs and policyholder rebates would likely sweep the nation.

The referendum set the MLR for dental plans at 83%, requiring insurers to refund any excess premium to customers.

An idea hatched with the ACA

MLRs have been a part of medical plans for more than a decade with passage of the Affordable Care Act. They require health insurers to spend no more than 10%-15% on administrative costs, with the bulk of revenues explicitly dedicated to medical care. Plan members would receive premium rebates if their plan exceeded the administration expenditure requirements.

Dental plans, which are typically structured more like gift cards than traditional health insurance, were exempt from the ACA provision. But they have since been targeted by advocates and dentist associations for inclusion for MLRs, especially when it was revealed that some plans dedicated very little expenses to actual dental care and spent huge amounts on administrative costs, including high salaries for top executives.

The NCOIL Health Insurance & Long-Term Care Issues took no voted during their Friday call, but heard from several stakeholders on the issue.

In July, the Academy of General Dentistry, along with several other dental organizations, sent a letter to the committee, urging them to adopt the Medical Loss Ratios for Dental Health Care Services Plans Model Act.

Mike Adelberg is the executive director of the National Association of Dental Plans. He blasted the Massachusetts effort to establish an MLR for dental plans, noting that three dental providers have left the small-plan market so far.

However, Adelberg said NADP is "prepared to support a Colorado-type approach and that we view Colorado as a significant concession. There aren't very many industries that step forward and say, 'Please regulate me more.'

"We also know that while the Colorado approach is characterized as transparency in reporting, it's also reporting plus remediation."

Does patient care really come first?

Jeff Album is vice president of public and government affairs for Delta Dental Ins. He claimed that applying an MLR to dental plans often has the opposite effect.

"The MLR penalizes your plan for lowering the premium to the customer. Because as you lower the premium the administration has to take a higher percentage of that premium," he explained. "A higher medical-loss ratio dental plan can actually deliver a higher savings to a customer, then a lower medical-loss ratio."

Representatives from the American Dental Association countered by questioning who the dental plan customer really is -- employers or the employees. Nationally, the American Dental Association is an aggressive backer of a dental MLR and members spent $5.5 million lobbying in support of the Massachusetts referendum.

Brianna Pittman-Spencer is senior director of government affairs at California Dental Association. Her group is concerned about MLR rates set too low, even as low as 50%, she said.

"We know that the medical MLR threshold is 80 to 85 [percent] and remain unconvinced that dental plans can't meet that," she said. "That would be a good thing for patients."

Clarification: An earlier version of this story did not fully explain Pittman-Spencer's point. She adds: "MLR data, including the plans with MLRs well below 50%, have exposed the need for minimum standards and meaningful coverage in dental insurance. Reform that makes dental coverage real insurance is needed to ensure value for patients, and that is CDA’s priority. MLR should be part (but not all) of that conversation."

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.