September 29, 2014 — Late last week, California Gov. Jerry Brown signed a bill that establishes standardized requirements for dental plans to disclose how they spend patient premiums.
The bill, AB 1962 introduced by Assemblymember Nancy Skinner (D-Berkeley), puts the state on a path to establish a minimum percentage of premium dollars that must be spent on patient care, according to the California Dental Association (CDA), which sponsored the bill.
Under California law and the Patient Protection and Affordable Care Act (ACA), all medical plans must spend at least 80% of patient premiums directly on patient care as opposed to profits and overhead. This is known as the medical loss ratio (MLR). This ratio is simply the ratio of claims payments to premiums collected and does not reflect the ACA adjustment for quality improvements or taxes, which, if applied, would serve to increase the reported ratio. In California, no minimum standard exists for dental plans, and some dental plans spend only 38% of premium revenue on patient care, according to a report issued earlier this year by the Blue Sky Consulting Group that was commissioned by the CDA.