State Insurance Legislators Endorse "Colorado-Plus" Model for Dental Plan MLRs

A new approach to managing dental plan Medical-Loss Ratios (MLRs), named "Colorado-plus," has gained the endorsement of the National Council of Insurance Legislators (NCOIL). This model, pioneered in Colorado and advocated by Delegate Steve Westfall of West Virginia, shifts the focus from a fixed dental-loss ratio to a more dynamic system of oversight and regulation.

The Colorado-plus model doesn’t set a strict Dental-Loss Ratio (DLR) percentage for dental plans. Instead, it requires carriers to report their DLRs to the insurance commissioner. After two years, the commissioner will calculate an average DLR, identify carriers deviating from this average, and investigate these deviations. Carriers consistently deviating from the norm could face enforcement actions, including issuing rebates or adhering to a minimum DLR determined by the commissioner.

This approach contrasts with the Massachusetts referendum, where voters established a fixed 83% MLR for dental plans. The Massachusetts model mandates premium refunds if this threshold is exceeded, a move celebrated by consumer advocates and the American Dental Association but criticized by the National Association of Dental Plans (NADP).

The NCOIL model, passed unanimously by the Health Insurance & Long-Term Care Issues Committee, is seen as a balanced compromise between the interests of plans and providers. The NADP supports this model, viewing it as a practical solution that promotes ongoing dialogue about dental coverage and oral health.

MLRs, part of medical plans since the Affordable Care Act (Obamacare), aim to ensure that health insurers dedicate a majority of revenues to medical care rather than administrative costs. Dental plans, previously exempt from ACA MLR provisions, have come under scrutiny for allocating minimal expenses to actual dental care, with a significant portion going towards administrative costs and executive salaries.

Delegate Westfall plans to introduce a bill in West Virginia based on this model and encourages his peers to follow suit. While NCOIL proposes insurance-focused legislation for state implementation, it holds no legislative power itself.