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California Dental Association aims to make dental plans more transparent

April 06, 2018 Sacramento — Legislation sponsored by the California Dental Association would increase the transparency and value of dental benefit plans in the state, while protecting patients, according to the state dental society.

Photo of Dr. Natasha Lee
Dr. Lee
Senate Bill 1008 calls for the establishment of a minimum dental loss ratio for individual, small and large group dental benefit products and requires increased transparency for consumers who purchase dental savings or dental discount products by requiring standardized disclosures of what a dental benefit plan does or does not provide. Under current California law, all medical insurance plans must adhere to a "medical loss ratio" standard requiring them to disclose how they spend insurance premium dollars and to spend a certain percentage directly on patient health care rather than administrative overhead and profits, according to the California Dental Association.  

"With Senate Bill 1008, we will be able to work toward establishing a reasonable loss ratio for dental benefit plans and require greater plan transparency so consumers can make purchasing decisions knowing more about how their health care dollars are spent," said Dr. Natasha Lee, president of the California Dental Association.

Medical plans for large groups — over 100 employees — must spend 85 percent of all premium dollars on health care; 80 percent is required for small group and individual products. This standard exists for all medical plans in the commercial market, while Medicaid managed care plans, including dental managed care plans, will be required to spend 85 percent in 2019, according to the state dental association.

The medical loss ratio requirement ensures a minimum value for consumers and holds insurance companies accountable for how they are spending patients' dollars. However, there is currently no standard for assuring value in commercial dental benefit plans, according to Dr. Lee.

To address this disparity, the California Dental Association in 2014 sponsored a bill to create a standardized requirement for dental plans to annually disclose to state regulators and the public how they spend patient premium dollars. After three years of reporting, the plan-reported data showed that too much of dental plan premiums are spent on overhead costs such as executive salaries and profits, Dr. Lee said.

According to the data, there was a wide variation in dental loss ratios by product type and market with some plans falling as low as 4 percent spent on patient care. Only 15 percent of dental products achieved a medical loss ratio of 80 percent or more, while the average dental loss ratios ranged from 52 percent for individual plans to 60 percent for small group plans and 70 percent for large group plans, Dr. Lee said.

Under SB 1008, discount dental plans or discount savings plans would be excluded in the calculation of dental loss ratios to ensure a more accurate reflection of the dental plans' expenditures on patient care. Dental plans would also be required to utilize a standardized and uniform summary of benefits and coverage disclosure template that provides the dental loss ratio of the product, along with plan deductibles, annual maximums, common dental services, anticipated patient out-of-pocket costs, plan limitations, exceptions and other important information.

"CDA believes that patients deserve the same protections and value from their dental plans that they receive from their medical insurance plans," said Lee. "If passed, SB 1008 would protect patients and move California further down that path."