Most of us are familiar with Medical Loss Ratios (MLR), and the direct impact it has on health plans due to ACA provisions. In the state of California, Dental Loss Ratios began to be published by insurance carriers in 2015. Maine then followed in 2022. Most recently, Massachusetts voters passed a provision in 2022 that all dental plans need to adhere to an 83% loss ratio.
So, what does this mean?
Plain and simple, this means 83 cents of every dollar needs to be applied to claims cost, and 17 cents of every dollar is allowed for administrative costs. Current averages today are about a 70/30 split.
How will Dental Insurers adjust to this new provision in MA?
Increased fee schedules and increased plan designs are the two big factors that will be adjusted. This will impact the consumer directly. Increasing fee schedules and plan designs will increase premiums.
How much of an impact will this have on premiums?
Leading international actuarial and consulting firms estimate this provision will impact dental premiums by 38%, based on increased fee schedules and enhanced benefits, alone.
Why does this matter in California?
As mentioned earlier, California was the first state to require dental insurers to begin publishing dental loss ratios. At some point , CA is going to review the cumulative data, and make decisions, based on the outcome of that data. The more we know now, the more we will be prepared if/when the time comes.
What about DLR rebates?
If there is a loss ratio rule, then most likely there will be a rebate provision. Currently, the ACA enforces MLR rebates, annually. We can anticipate some type of rebates if this provision becomes law.
What else should I know?
One important point to note, is that this is not a Federal initiative. Each state will determine their stance on DLR, if any. Therefore, provisions from state to state could and will vary.
Jeremy graduated from Brockport University with a Bachelor’s in Science. He brings over a decade of leadership experience, with a concentration on process improvement, staff development, and client success. With an ever-changing market, Jeremy is always researching and studying the industry, so he and his team can provide best in class, consulting and service.