Legislature approves CDA-sponsored bill protecting patient premiums

Monday, Sep 15, 2014

The California Legislature has approved a CDA-sponsored bill establishing standardized requirements for dental plans to report the amount of patient premium dollars spent directly on dental care.

AB 1962, authored by Assemblymember Nancy Skinner (D-Berkeley), will bring dental plan reporting to the same level as currently exists for medical plans and puts the state on a path to establish a minimum percentage of premium dollars that must be spent on patient care. The bill, which in August was approved unanimously in the Assembly and on a 30-4 vote in the Senate, is now under consideration by Gov. Jerry Brown, who has until Sept. 30 to sign or veto bills.   

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 the plans’ administrative costs, overhead and profits, a standard known as a medical loss ratio (MLR). However, no minimum standard exists for dental plans.

Because dental plans currently self-report this data without consistent standards to adhere to and without the details necessary to verify their spending ratios, there is a lack of reliable data for the state to develop an evidence-based minimum standard. AB 1962 requires dental plans to uniformly and publicly disclose the financial data necessary to assess their spending on patient care and declares the Legislature’s intent to adopt a formal minimum standard for dental plans by Jan. 1, 2018 based on the data reported.

“AB 1962 is a great step toward instituting a critical protection for the 15 million Californians enrolled in private dental plans and CDA is very grateful to Assemblymember Skinner for pushing this cause,” said CDA President James Stephens, DDS. “This bill will shine a light on dental plan spending and help guide the state toward an appropriate minimum standard for spending on patient care.”

Under AB 1962, all California dental plans will have to annually report the necessary financial data to the state Department of Managed Health Care and Department of Insurance by Sept. 30. The first reporting deadline will be in 2015.

“The goal for dentists is to take in patients in need of care and for those patients to have quality coverage that allows them to get the treatment they need,” added Stephens. “However, many dentists find themselves in the position of having to explain the limited value of certain dental plans to disappointed patients who expect and deserve better coverage. This bill will provide more transparency around dental plans and ultimately provide greater value for patients.”

Under the MLR rule for health plans, consumers have saved an estimated $9 billion on premiums since 2011, according to a 2014 report by the U.S. Department of Health and Human Services (HHS). The report attributes this to the fact that companies are charging lower premiums and operating more efficiently than they would have in the absence of the MLR standard. Additionally, health plans that do not meet the standard must issue rebates to policyholders to make up the difference. The HHS report adds that in 2014 alone, 6.8 million consumers across all states and markets will receive over $330 million in refunds, with an average refund value of $80 per family.

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