NCOIL Panel Creates Model for State Dental Loss Ratio Laws

States now have a template they can use to change the way dental insurance works.

The National Council of Insurance Legislators said Wednesday that its Health Insurance & Long Term Care Insurance Issues Committee has approved a model act that includes rules for dental plan medical loss ratios.

The new NCOIL dental loss ratio model would push dental insurers to spend at least as much as their competitors on care.

What it means: Clients could have an easier time shopping for high-value dental insurance.

The history: Today, many dental plans spend only about 60% to 75% of their premium revenue on patient care, quality improvement efforts and other, closely related items, and a few plans spend less than 20% of their premium revenue on care, according to the American Dental Association.

Massachusetts voters approved a minimum dental loss ratio law ballot measure for their state in November 2022, according to the ADA.

Arizona, Colorado and Nevada have their own homegrown minimum DLR laws in 2023.

An earlier version of the model was based on the Affordable Care Act minimum medical loss ratio rules. The ACA requires large plans to spend at least 85% of premium revenue on care or pay rebates, and it requires issuers of individual coverage and small-group policies to spend at least 80% of premium revenue on care or pay rebates.

The current model draft: The current DLR model draft calls for insurers to send standardized DLR reports to their regulators. If regulators found that an insurer's DLR was very low, the regulators could require the insurer to send its customers rebates, NCOIL officials said.

If an insurer was an outlier for two consecutive years, regulators could make it comply with an ACA-like minimum dental loss ratio rule, officials said.

The process: NCOIL's executive committee plans to put the new model through a final ratification process in April.

A state senator or a state representative can already use the version approved by the committee, or an earlier version, to start the process of writing a dental loss ratio bill.

The model was sponsored by delegate Steve Westfall of West Virginia.

The American Dental Association and the National Association of Dental Plans participated in the drafting discussions, and both support the model.

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