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CDA Sponsored Bill Signed by California Governor

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Posted: September 26, 2014
Edited by Dentaltown staff

Sacramento, CA — September 26, 2014 — Gov. Jerry Brown has signed CDA-sponsored legislation into law that will bring increased accountability and transparency to dental insurance plans in California.

Assembly Bill 1962, authored by Assemblymember Nancy Skinner (D-Berkeley), establishes standardized requirements for dental plans to disclose how they spend patient premium dollars and puts the state on a path to establish a minimum percentage of premium dollars that must be spent on patient care.

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 insurance company profits and overhead, a standard known as a medical loss ratio (MLR). However, no minimum standard exists for dental plans. Due to the lack of this patient protection, some dental plans self-report spending as little as 38 percent of premium revenue on patient care.

“This law will provide greater transparency for patients and employers who have a right to know that they’re getting value out of their premium dollars dedicated to dental care,” said CDA President James Stephens, DDS. “This bill will shine a light on dental plan spending, which should incentivize plans to improve the value of their products and will help guide the state toward an appropriate minimum standard for spending on patient care.”

Currently, dental plans self-report this data without consistent standards and the details necessary to verify their spending ratios. As a result, 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, bringing dental plan reporting to the same level as currently exists for medical plans, 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 we are very grateful to Assemblymember Skinner and the governor for moving the state forward on this issue,” Stephens said.

With 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.

Under the MLR rule for medical 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, medical 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 will receive rebates.
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