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Understanding Dental Loss Ratio

Why do dentists care about Dental Loss Ratio?

Patients rightfully expect their dental insurance premiums to be used to support their oral health, and patients deserve visibility into how much of their premiums are paying for care as opposed to dental insurer administrative, marketing and operations costs. Dentists care about their patients, and it is unfair that their money is being spent on administrative costs, salaries, and profits rather than paying for actual patient care.

What is Dental Loss Ratio? Why does it exist?

Dental Loss Ratios, or DLRs, set a minimum amount that insurers must spend on actual healthcare services in support of patient care. DLRs were established at the national level for medical/health insurers by the Affordable Care Act: Federal law requires medical insurance plans to minimally operate at an 85% MLR for larger carriers and 80% MLR for smaller carriers. In most states, dental insurers are not held to any such standard.

How will patients benefit from establishing a Dental Loss Ratio?

Ensuring transparency and value in dental insurance rates will help reduce out-of-pocket costs for dental patients, which will make access to dental care and procedures more affordable and encourage people who are reluctant to go to the dentist to receive dental care.

How was it determined that the DLR for dental plans should be at 80% and not some other number?

It’s within the same range the Affordable Care Act (ACA) mandated, which has worked for years.

Why does medical insurance have a requirement, but dental insurance does not?

The ACA includes a host of positive reforms for patients, including a Loss Ratio for major medical health plans. Because of a quirk in how dental plans are sold, largely as stand-alone dental plans separate from medical coverage, the plans do not have to abide by consumer protections like loss ratios . That said, it is certainly time to bring this important consumer protection reform that has helped consumers receive quality, accessible and more affordable care on the medical side to dental insurance as well.

What happened when the ACA imposed MLR on medical insurance companies?

The regulation of insurers’ Medical Loss Ratios is one of the most significant consumer protections in the ACA that took effect in 2011. This provision helps protect consumers from overpriced health plans and offers rebates when insurers do not deliver the required percentage of care as determined by the MLR in the state.  Kaiser Family Foundation estimates that insurers will issue a total of about $1 billion in MLR rebates across all commercial markets in the U.S. in 2022. That’s 8.2 million people in the U.S. who will be owed a rebate from their medical insurers that did not spend enough on healthcare coverage.

How will this legislation increase accountability and transparency in dental insurance?

Standardizing dental loss ratio will increase transparency and accountability in dental insurance by requiring dental insurance carriers to disclose administrative costs and other financial information annually.