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CA Plans Medical Loss Ratio Guidelines for Dental Insurance Plans

Dental plans have not had to meet the same medical loss ratio guidelines as medical insurance options, but some experts believe that should change.

Dental plans may need updated MLR guidelines.

Source: Thinkstock

By Thomas Beaton

- Consumers of dental plans may benefit from more transparency around the medical loss ratio (MLR) of dental insurance options, asserts the California Dental Association (CDA).

In a recent research paper published in Health Affairs, the CDA found that dental plans average an MLR of 76 percent, significantly below the rates of medical plans.  Dental plans are not subject to the same MLR rules as medical plans are under the Affordable Care Act, yet the CDA believes that adhering to similar guidelines could protect consumers from subpar dental coverage offerings.

In 2014, California implemented a law that required dental plans to report their dental loss ratio (DLR), but did not set minimum thresholds for what proportion of a premium must be spent on patient care.

“In the three years since [the law was passed], dental plan reporting demonstrated a wide variation in DLR by product type and market, with some plans falling as low as 4 percent spent on patient care, raising significant questions about the consistency and value they provide to patients,” CDA said. “In fact, the average dental DLR in 2014-15 in California was 61 percent, considerably lower than the 76 percent average reported nationwide.”

Currently, the ACA requires large-group health plans to have an MLR of 85 percent, while small group and individual plans are required to have an MLR of 80 percent

Only 9 percent of California’s dental health plans reported that their dental loss ratio (DLR) would meet the ACA’s thresholds, the CDA found. Around 6.6 million Californians are covered by dental health plans that would fall short of medical MLR requirements.

Just 29 percent of plans would meet a proposed state DLR threshold of 75 percent for large-group plans and 70 percent for small and individual plans.

“This report highlights exactly what CDA has been advocating for through its legislative efforts,” said CDA President Natasha Lee, DDS. “Consumers deserve transparency when making choices about their dental plans.”

Senate Bill 1008, which is awaiting signature by Governor Jerry Brown, attempts to increase consumer protections and create new regulations around how dental plans disclose their benefits and coverage information. If the bill becomes law, dental plans would have to provide copies of health plan disclosures upon a consumer’s request and display spending rates for provider services.

Similar legislation to expand consumer transparency of dental health plan benefits has moved through the Massachusetts legislature and still awaits a vote in the Senate.  In 2017, Colorado Governor John Hickenlooper signed a bill into effect that prohibits health plans from adding additional plan fees for services

The implementation of a standardized DLR ratio and new consumer transparency guidelines could lead to dental insurers adopting payer strategies for managing premium spending, ensuring profitability, and maintaining sufficient plan quality.  

Medical plans currently address these challenges do this by providing additional preventive care benefits to meet MLR spending guidelines and investing in claims administration technology to limit wasteful spending.


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