S4063

An Act concerning medical loss ratio for dental insurance and supplementing P.L.1979, c.478 (C.17:48D-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the “Transparency for Dental Health Care Costs Act.”

2. As used in this act:

“Commissioner” means the Commissioner of Banking and Insurance.

“Dental carrier” or “carrier” means a dental insurance company, dental service corporation, or dental plan organization authorized to provide a dental benefits plan in New Jersey or a health benefits plan in New Jersey that includes coverage for dental services.

“Dental benefits plan” or “plan” means a benefits plan which pays or provides dental expense benefits for covered dental services and is delivered or issued for delivery in the State by or through a dental carrier on a stand-alone basis and shall not include plans under Medicaid or NJ FamilyCare.

“Dental loss ratio” means percentage of premium dollars spent on patient care as calculated by dividing the numerator by the denominator, where (1) the numerator is the sum of the amount incurred for clinical dental services provided to covered persons, the amount incurred on activities that improve dental care quality, and other incurred claims as described in 45 C.F.R. s.158.140; and (2) the denominator is the total amount of premium revenue, excluding federal and State taxes; licensing and regulatory fees paid; nonprofit community expenditures as described in 45 C.F.R. 158.162; and any other payments required by federal law.

3. a. A carrier that issues, sells, renews, or offers a specialized dental benefits plan policy or contract shall file a dental loss ratio annual report with the commissioner that is organized by market and product type and contains the same information required in the 2013 federal Medical Loss Ratio (MLR) Annual Reporting Form (CMS-10418). The filing shall also include, but not be limited to, the following data:

(1) number of covered persons, including the number of covered persons who meet or exceed the annual coverage limit;

(2) plan cost-sharing and deductible amounts; and

(3) annual maximum coverage limit.

b. The dental loss ratio reporting year shall be for the fiscal year during which dental coverage is provided by the plan. All terms used in the annual report shall have the same meaning as used in section 2718 of the federal “Public Health Service Act,” (42 U.S.C. s.300gg-18) and in 45 C.F.R. Part 158.

c. If data verification of the carrier's representations in the annual report is deemed necessary, the commissioner shall provide the carrier with a notification 30 days to submit any information required by the commissioner.

d. By January 1 of the year after the commissioner receives the dental loss ratio information collected pursuant to subsection (a) of this section, the commissioner shall make the information, including the aggregate dental loss ratio and other data reported pursuant to this section, available to the public in a searchable format on a public website that allows members of the public to compare dental loss ratios among carriers by plan type by:

(1) posting the information on the department’s website; or

(2) providing the information to the administrator of an all-payer health claims database. If the commissioner provides the information to an administrator, the administrator shall make the information available to the public in a format determined by the commissioner.

e. The commissioner shall issue an annual report on the data collected pursuant to this section to the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1).

4. a. (1) The commissioner shall aggregate dental loss ratios for each carrier by year pursuant to section 3 of this act for each market segment in which the carrier operates. The commissioner shall calculate an average dental loss ratio for each market segment using aggregate data for a three-year period including data for the most recent dental loss ratio reporting year and the data for the two prior dental loss ratio reporting years.

(2) Newer experience shall be subject to reporting standards at 45 C.F.R. s.158.121

b. (1) The commissioner shall calculate an average dental loss ratio for each market segment using the data pursuant to subsection a. of this section, identify as outliers dental plans that fall outside one standard deviation of the average dental loss ratio, and report those plans to the public pursuant to subsection d. of section 3 of this act and the Legislature pursuant to subsection e. of section 3 of this act.

(2) A carrier shall not be considered an outlier if its dental loss ratio in a market segment is within three percentage points of the average dental loss ratio. A higher threshold may be set in unique circumstances as determined by the commissioner.

c. The commissioner shall investigate a carrier that reports a dental loss ratio lower than one standard deviation from the mathematical average, and may take remediation or enforcement actions against the carrier, including ordering the carrier to rebate, in a manner consistent with 45 C.F.R. Part 158(B) all premiums paid above the amounts that caused the carrier to have achieved the mathematical average of the data submitted in a given year for a given market segment.

d. The report required pursuant to subsection b. of this section shall be organized to show year-over-year changes in a carrier’s outlier status relative to meeting the one standard deviation outlier standard in subsection b. of this section. If the dental loss ratio for a carrier in a market segment does not increase and remains an outlier as described in subsection b. of this section after two consecutive years, barring unique circumstances as determined reasonable by the commissioner, the carrier shall be subject to a minimum dental loss ratio percentage by market segment. The commissioner shall promulgate rules establishing the dental loss ratio percentage based on, at minimum, the average of existing carrier loss ratios by market segment in the State to be effective no sooner than 42 months after a carrier is determined to be an outlier as defined in this section.

e. A carrier subject to remediation in subsections c. and d. of this section shall provide any rebate owing to a policyholder no later than September 30 of the fiscal year following the year for which the ratio described in subsection a. of this section was calculated. The commissioner may establish alternatives to direct rebates to include premium reductions in the following benefit year.

f. The commissioner may promulgate rules and regulations that create a process to identify carriers that increase rates in excess of the percentage increase of the latest dental services Consumer Price Index as reported through the United States Bureau of Labor Statistics.

5. a. The commissioner, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), shall adopt rules and regulations as necessary to effectuate the purposes of this act. This shall include definitions of the following:

(1) expenditures for clinical dental services;

(2) activities that improve dental care quality but shall specify that activities conducted by an issuer intended to improve dental care quality shall not exceed five percent of net premium revenue; and

(3) overhead and administrative cost expenditures.

b. The definitions promulgated pursuant to this section shall be consistent with similar definitions that are used for the reporting of medical loss ratios by carriers offering health benefit plans in the State. Overhead and administrative costs shall not be included in the numerator.

6. This act shall take effect on the first day of the third month next following enactment and shall apply to all policies and contracts delivered, issued, executed, or renewed on or after that date.

STATEMENT

This bill requires carriers of dental benefits plans to file a dental loss ratio annual report with the commissioner that is organized by market and product type. The intent of the bill is to provide for transparency of the expenditure of dental health care plan premiums. The report is to contain the same information required in the Medical Loss Ratio Annual Reporting Form (CMS-10418). The filing shall also include, but not be limited to, the following data: (1) number of covered persons, including the number of covered persons who meet or exceed the annual coverage limit; (2) plan cost-sharing and deductible amounts; and (3) annual maximum coverage limit. The Commissioner of Banking and Insurance is to investigate a carrier that reports a dental loss ratio lower than one standard deviation from the mathematical average, and may take remediation or enforcement actions against the carrier, including ordering the carrier to rebate.