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California bill steers patient premiums away from administrative costs

October 23, 2014

By Kelly Soderlund

Dr. Stephens
Dr. Stephens
Sacramento, Calif.
— California dental patients can rest assured that the premiums they pay go more toward their oral health care than to overhead and administration costs.

California Gov. Jerry Brown signed a bill sponsored by the California Dental Association that increases the accountability and transparency of dental insurance plans in the state. The bill establishes standardized requirements for dental plans to disclose how they spend patient premium dollars and puts the state on a path to establish a minimum percentage of consumer premium dollars on patient care.

Under current state law and the federal Affordable Care Act, all medical plans must spend at least 80 percent of patient premiums directly on patient care as opposed to insurance company profits and overhead, a standard known as a medical loss ratio. No minimum standard exists for dental plans.

“This law will provide greater transparency for patients and employers who have a right to know that they’re getting value out of their premium dollars dedicated to dental care,” said CDA President James Stephens. “This bill will shine a light on dental plan spending, which should incentivize plans to improve the value of their products and will help guide the state toward an appropriate minimum standard for spending on patient care.”

Currently, dental plans self-report this data without consistent standards and the details necessary to verify their spending ratios, according to the CDA. As a result, there is a lack of reliable data for the state to develop an evidence-based minimum standard.