January 30, 2024

NCOIL panel adopts compromise MLR model for dental plans

A panel of state insurance legislators passed its own version of a medical-loss ratio for dental plans Friday, dubbed “Colorado-plus” by Del. Steve Westfall, R-W.V.

The National Council of Insurance Legislators committee had debated an MLR model for dental plans for months before finding a compromise idea in a Colorado law signed by Gov. Jared Polis in June.

Medical-loss ratio dictates minimum spending on patient care. Instead of requiring a straight dental-loss ratio and setting a specific percentage for dental plans, Colorado is requiring carriers to submit a DLR information to the insurance commissioner.

After two years, the commissioner is required to issue rules to calculate an average DLR, verify any specific carriers that deviate from the average DLR, and investigate the cause of the deviation.

The NCOIL plan, which passed unanimously by the Health Insurance & Long-Term Care Issues Committee, is very similar, Westfall explained.

“The commissioner will by authorized to take enforcement action against the outliers, which includes ordering them to issue rebates,” he said. “If the carrier remains an outlier two consecutive years, then the carrier is subject to a minimum DLR percentage, as determined by the commissioner.”

Westfall said he will introduce a bill soon in West Virginia and encouraged his colleagues to do the same. NCOIL proposes insurance-focused legislation that members can take to their respective states, but has no legislative powers of its own.

MLR began with Obamacare

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 model 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.

‘Thoughtful compromise’

The National Association of Dental Plans blasted the Massachusetts effort to establish an MLR for dental plans, noting that dental providers are abandoning the small-plan market.

However, Owen Urech, director, government relations for NADP, spoke in favor of the NCOIL model.

“NADP believes that this represents a practical and thoughtful compromise between plans and providers, which we hope will be considered by state policymakers,” Urech said. “Going forward, we hope this is part of a continuing dialogue on dental coverage and oral health, which is constructed towards the mutual goals of improving Americans’ oral health.”

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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