Summary: The National Council of Insurance Legislators approved model legislation to set a dental loss ratio, ensuring more premium dollars go toward patient care. This initiative, supported by the ADA, mandates refunds if spending thresholds aren’t met and increases transparency in dental insurance.

Key Takeaways:

  • Enforces spending on actual patient care.
  • Requires refunds for unmet spending thresholds.
  • Aims for transparency akin to major medical plans under the ACA.

Model legislation for a dental insurance loss ratio was officially approved by the National Council of Insurance Legislators (NCOIL), the American Dental Association (ADA) announced.

Understanding the Dental Loss Ratio

The model legislation was crafted to serve as a template for state legislation that would help patients with dental insurance get more value out of their dental plans.

The ADA stated that it has worked toward this reform, and the dental insurance industry for the first time conceded that it is appropriate to set what is called a loss ratio on dental plans.

Benefits of the Dental Loss Ratio

A dental loss ratio requires dental insurance companies to disclose the percentage of premium dollars collected that is actually spent on patient care and not on company executives’ salaries or marketing. Under a dental loss ratio (DLR), insurance companies would also be required to refund a part of the premium collected to insured patients if the insurance companies fail to meet the set percentage.

Without a dental loss ratio, insurance companies can keep the unspent premiums as profit to be used for marketing, salaries or other company overhead, rather than patient care. Additionally, the provisions in the DLR model legislation aim to set transparency standards consistent with those established under the Affordable Care Act for major medical insurance plans.

“This model legislation is a win for dentistry. It proves the insurance industry agrees that reporting ratios is not enough to guarantee premiums will go towards actual patient care,” said Linda Edgar, DDS, president of the ADA. “It goes beyond reporting because it guarantees enforcement—meaning if a dental plan repeatedly reports loss ratios that are too low, it will have a loss ratio imposed on it by the state. So, one way or another, dental plans will have to provide more value to patients by paying out more for their care.”

Previous Model Legislation Efforts

Prior to the dental loss ratio model legislation, the ADA has successfully worked with NCOIL on model legislation on four other issues of benefit to patients and dentists: non-covered services, freedom in network leasing, virtual credit cards, and prior authorizations. More than 100 laws in states have been passed on these issues as a result of model legislation on these issues combined with state dental society advocacy efforts.

The model legislation provides an agreed-upon starting point for the introduction of state bills across the country, while leaving the door open for states to pursue additional provisions on behalf of patients with dental insurance. It is a tool available for dental societies and other stakeholders to use when introducing legislation on this issue in their states.