Episode 2: THE PULSE ON DENTAL LOSS RATIOS: WHAT VIRGINIA'S NEW DATA REVEALS

Summary: In this episode of The Fulcrum podcast, VDA CEO Ryan Dunn and VDA Counsel Scott Johnson discuss the impact of Virginia's 2024 transparency legislation requiring dental insurance carriers to disclose their Dental Loss Ratios (DLR). They review the first loss ratio reports released by the Virginia Bureau of Insurance, explaining what the data entails and what early trends are emerging. They also highlight the VDA's Dental Insurance Grievance (DIG) tracker, its role in identifying and addressing issues with dental insurers, and how ongoing data collection will benefit VDA members and consumers. Additionally, they emphasize the importance of educating members and leveraging the new transparency to make informed decisions about dental insurance carriers.

Host:

Ryan Dunn is the CEO of the Virginia Dental Association. Ryan has played major roles with four national and statewide Associations while also spending time working on Capitol Hill. When he’s not talking all things dental, he’s talking about his family and baseball–and sometimes both at the same time.

Guest: 

W. Scott Johnson is a seasoned expert in Governmental Affairs; he has lobbied for clients on the front line of healthcare legislation for over 30 years. His steadfast presence in the Virginia General Assembly has earned the recognition and respect of an ever-changing roster of influential legislators and statewide officeholders who seek his counsel when governing the most complex healthcare issues facing clients today. Contact Scott at sjohnson@hancockdaniel.com

2023 Dental Carriers Loss Ratios Report - https://www.scc.virginia.gov/consumers/insurance/resources-ins-consumer/dental-carrier-loss-ratios/

VDA’s Dental Insurance Grievance Tracker - https://www.vadental.org/dental-insurance-grievance-tracker 

Credits:

• Host: Ryan Dunn
• Guest: W. Scott Johnson
• Producer: Paul Logan
• Post-Production/Editor: Shannon Jacobs

Subscribe, share, and send your feedback and topic ideas to thefulcrumpodcast@vadental.org.

The information, opinions, and recommendations presented in this Podcast are for general information only, and any reliance on the information provided in this Podcast is done at your own risk. This Podcast should not be considered professional, medical, or legal advice.

Music in this episode from Epidemic Sound

Transcript

[00:00:00] Paul Logan: In 2024, Virginia successfully passed transparency legislation requiring dental insurance carriers to disclose their dental loss ratios. The first loss ratio reports have now been received and posted by the Virginia Bureau of Insurance. Today on The Fulcrum, VDA CEO, Ryan Dunn and VDA Counsel Scott Johnson, discuss what they see in those reports, some early outcomes from the VDA's Dental Insurance Grievance tracker, and what to expect next.    

[00:00:37] Ryan Dunn: Hello, and welcome to another episode of The Fulcrum the VDA's new podcast. I can still say new, we're only at a handful of episodes. Thank you so much for taking the time to join us. We hope that we can bring you a better, quicker more concise and valuable updates through a conversation in our podcast series here, and um, a little bit more information that can flow in a conversation that uh, people can take in , at their leisure. So today we are gonna be focusing on the dental loss ratio legislation we had in the 2024 General Assembly.

[00:01:12] Ryan Dunn: It was a focus on transparency. It was a bill that we got through last year, in 2024 that the rest of the country really looked at as a prime example of something that other states should aspire for and look towards. We knew it was just the start and just the beginning of this process. But again trying to bring some transparency and shine some light on a dental loss ratio. What premiums are being collected by dental insurance and what is being paid out, right? The kind of age old question that we wanna see. So we finally have some answers from 2023 data, and joining us today is the VDA's General Counsel and one of our lobbyists as well, Scott Johnson. Welcome Scott. 

[00:02:04] Scott Johnson: Thank you Ryan, and pleasure to be here with you this morning. 

[00:02:07] Ryan Dunn: Thank you so much, Scott. Scott is a all knower of things related to insurance . Right, Scott? 

[00:02:14] Scott Johnson: I do a lot of work in that area. Yes, sir. 

[00:02:16] Ryan Dunn: Yes, you do. And we're, we are very grateful for all of our team that we have from Scott and Ben Traynham on the general counsel side and Tripp, and Missy, all of them with Lindl Corporation. We have a great team here internally and together we can move the needle quite often. And this was one of those bellwether pieces of legislation we hung our hat on that the ADA looked at and was excited to, to take some of the things that we've been able to accomplish. We had to wait a little bit for the data to come in, but we finally have 2023's data. So the Bureau of Insurance put out a call for all the insurance companies, dental insurance in Virginia, the dental plans to submit their data going back to 2023. So we'll have starting there, moving forward every year now we'll have this data, but we got the data back. And Scott, I wanted to kick it over to you to explain what the data is that we got back and and what it looks like and what we asked for. And then at the end we'll talk a little bit about maybe what we may have to go back and ask more of.  

[00:03:27] Ryan Dunn: So if you wouldn't mind, Scott, give us a little brief. 

[00:03:30] Scott Johnson: Sure Ryan, thank you very much. So maybe it's best to level set looking at what was the legislation that the General Assembly passed at the advocacy of the Virginia Dental Association in 2024. And basically what it requires is dental carriers to report to the Bureau of Insurance on an annual basis, the actual loss ratio for coverage that they write to large employers. Large employers as defined in the legislation to mean an employer that has at least 51 employees. The importance of that is Virginia's Bureau of Insurance already was receiving lost ratio information in the individual dental market. In the small group dental market, , but they were not receiving anything for large employers. And so that was the target of transparency to get that. Ryan is correct that the legislation also required the first reporting to be the 2023 calendar year data.

[00:04:32] Scott Johnson: And so the Bureau of Insurance reached out this past Fall to approximately 25 or 26 carriers. Those dental carriers represent 98 or 99% of all large group dental insurance policies written in the state. So it was extremely comprehensive. And they had those carriers submit their 2023 data and that information was just recently published and it is available online.

[00:05:01] Scott Johnson: They soon will be asking for the 2024 data and then starting in April of this year, 2025, the data will automatically be reported earlier in the year. So we'll be able to see trends. Next thing of note is you ought to say, what are they asking for? What does this data mean? And there are two measurements of this data that the Bureau asked for that, we wanted to see., And the first thing is something called an incurred loss ratio.

[00:05:28] Scott Johnson: Incurred loss ratio is defined in the data call to basically mean the number of dental claims divided by the number of earned premium. And that's technology talk for the number of claims you gotta pay dentist. Compared to the number of premium dollars you receive from these large employers It's important to note that a number of these dental carriers act as third party administrators for self-insured plans, and that is not considered direct written premium. So that was not included. That's a separate calculation. So if you have a super large employer, like a Capital One, an Altria, a John Deere, and you've got a dental carrier that is administering that self-insured plan, that ERISA plan that's not included in this number, this is purely directly what's written. 

[00:06:23] Ryan Dunn: Right? , I think that's important, really important part for people to understand before you get too far down. So if you take the large employers plans, the small group and the individual combined, those three categories that are not self-insured those make up about 38% of all of the , dental, insurance written in the Commonwealth.

[00:06:47] Ryan Dunn: So when we're talking about these numbers. We're talking about those three combined. But the number you're talking about specifically when we're when we start to get to it, is just large employers. 

[00:06:59] Scott Johnson: That's right. 

[00:07:00] Ryan Dunn: Even smaller than 38%. 

[00:07:03] Scott Johnson: That's right. And so we've got the incurred loss ratio.

[00:07:07] Scott Johnson: So that's like the first blood pressure on the patient. And the second blood pressure that they asked for was the actual loss ratio. Actual loss ratio was defined in the statute that the dental association got passed. And basically that enables a carrier to remove five categories of payments from the calculation.  

[00:07:29] Scott Johnson: They're able to take out whatever they have to pay, if do have to anything, for state and federal taxes. Whatever they have to pay for licensure and regulatory fees. If they publicly disclosed non-profit community benefit expenditures. To support dental services that can be reduced. Any amount that have been identified through fraud reduction efforts and then any other amounts required by state or federal law, such as taxes. Each of these carriers then submitted that second calculation. So now the carriers have submitted two data points. One, an incurred loss ratio, meaning what are you paying dentists, compared to the premium dollars coming in the door. And the second one was actual loss ratio and that basically says that uh, once you remove the taxes and fees and any charitable deduction, what is that actual loss ratio calculation? To no great surprise, once these reports were submitted, the Bureau of Insurance, which we need to compliment them, they worked with us on the legislation. They have been a good partner working with us throughout all of this. They had their actuary at the Bureau of Insurance analyze the data that was submitted to look for validity, look for trends look for comparisons. Some of the carriers were asked to verify their information and submit supplemental information, and they did. But the good news is the two calculations, the incurred loss ratio and the actual loss ratio, the two blood pressures as I described them, were relatively close and that implies accuracy. That's what everybody was looking for. So now we have this for the first time for those large employers. The bureau already has been capturing and receiving from carriers information on the individual and small group markets, and that is described as an anticipated loss ratio. And they file these annually and they trend them and track 'em for a number of years. And basically at the start of the calendar year, that's a carrier telling the Bureau of Insurance, here's what we anticipate our loss ratio to be for the year. And on the forms that they file, they go back after the completion of the calendar year and they show the cumulative ratio or actually what was taking place or what did take place. 

[00:09:50] Scott Johnson: It's not apples and oranges to compare loss ratios between the three product lines. Meaning when you look at the individual dental carrier market, when you look at the small group market and you look at the large employer market, they're very different markets. They have very different administrative costs. And it's not unique to Virginia. It costs more to administer and run individual dental plans and handle their claims and small group plans. It is less administrative cost in the large group market because you've got more claims, larger efficiencies, so the loss ratios in the individual and small group market is very different number-wise than in the large group. For example, the largest dental carrier in the state and large group market for 2023, their incurred loss ratio was right at 80-81%. That same carrier in the individual market, their loss ratio anticipated loss ratio was 65% in the individual market and 73 in the small group.  

[00:10:56] Ryan Dunn: That's consistent, that's expected, but don't be alarmed when you see a number that's lower for individual and small group.   

[00:11:05] That was one of those expected, like you said uh, we expected to kind of see that, um. transgression from cost to administer being much higher on the individual.  

[00:11:16] Ryan Dunn: One of the things I've heard people asking and wanted to bring it up is, they would not be allowed, or the bureau would say something if any of the ERISA the self-funded was included into these, right? They have to keep these all very segregated.

[00:11:39] Ryan Dunn: They can't meld any groups together. The Bureau requires them to do that and that's how we're able to segment these, right? There's no inflation happening by taking some from other categories and putting it in. 

[00:11:54] Scott Johnson: That is correct. The definitions are very specific. The reporting is very much in individual swim lanes. Nobody is blending over and nobody's jumping the line and swimming in somebody else's lane. They're all individual, small group or large group. 

[00:12:08] Ryan Dunn: Gotcha. And then you know, the bureau is also the one, like you said , took the data and got us those ratios. So they did the calculations and , from just what we're hearing , maybe not everyone wants to see that and say uh, those numbers don't, don't match my reality.  

[00:12:28] Ryan Dunn: And those numbers can't be right. But the Bureau makes sure that they are right because, there's A, there's pretty stiff penalties. But we also know that the bureau did go back to some carriers to say, Hey, this doesn't look right. Are you sure you carried the one? And are you sure that these numbers are right? Follow up and give us, make sure that these are right. 'cause some of the, like you said the number between the anticipated and the actual should be within a relatively small margin. If those items that you listed are included and they should be within reason. So I bring all that up to say we're pretty confident in this being as accurate as we can possibly expect it to be.

[00:13:19] Scott Johnson: Exactly. A dental carrier, if they falsify a report to the Bureau of Insurance, they risk fine penalty all the way to the most drastic thing of losing their license where they longer write in the state. And the benefit the bureau has on their staff, an actuary that basically is the impartial reviewer of this data and going through it to make sure it looks consistent, make sure that the trends are expected. And so that's the bureau's good faith effort to verify what was submitted. 

[00:13:50] Ryan Dunn: And the bureau has every incentive to want to see the numbers accurate. They're there to make sure that a, from a business standpoint, that these. Insurance companies aren't going bankrupt and have enough to cover claims, but also that they're not doing anything fraudulent.

[00:14:07] Ryan Dunn: Correct?   

[00:14:10] And the Bureau of Insurance has been fantastic to deal with. But something I wanna reiterate, this is just the beginning, right? So we're seeing some numbers here some calculations in the final numbers in these ratios.  

[00:14:24] Ryan Dunn: And in the code and or in the definitions of the legislation, we passed some of those, we know how those numbers came about. We are probably going to want to see some more data over the course of the next few years as these things come out and that, that might require us to go back to the general assembly or to ask for follow up or to just simply ask the carriers themselves.  

[00:14:50] Ryan Dunn: We might be able to get some of that data that way. But again, when we went down this road, we knew very much that this was step one in the process, right? This was the first time anything like this had ever been done to look at the actual loss ratio. A really important number and the incurred because that took out some of the narratives of this is very expensive and to administer and all of that type of thing.

[00:15:19] Ryan Dunn: So I just want people to know that this is the first round . We've got more questions from it. There's been a lot of discussion since we've seen the numbers come in and some are surprising and some are not. 

[00:15:34] Scott Johnson: Yeah, and I think Ryan, the most important thing too that you're gonna be able to provide to your members of the VDA is looking at this on a trend basis.  

[00:15:44] Scott Johnson: The data that's been reported, like you said, is just step one. It's gonna be important that we monitor this ongoing to see if the trends are consistent to see if there's a drastic drop off to see if particular carriers perform better than others. It's an educational component for VDA members to say when they're making a decision of what insurance plans they want to participate or not, they need to know what the loss ratios are, as much as an employer or a patient needs to know in order to decide who they wanna purchase their coverage with. 

[00:16:17] Ryan Dunn: Absolutely.

[00:16:17] Scott Johnson: So it's a educational tool that the VDA members now have that they did not have before. And it should benefit everyone all the way around. 

[00:16:27] Paul Logan: Scott, this is, Paul. One of the other things we're tracking as far as trends is with the dental insurance grievance tracker.  

[00:16:36] Paul Logan: That's another tool that was put in place by this legislation last year to allow , the VDA staff and our members to be aware of trends in how dental carriers are treating certain things. Can you talk a little bit about the process we've gone through with that and what we've seen?

[00:16:55] Scott Johnson: Sure. So the initial dental insurance grievance tracker received approximately 200 reports from participating, VDA members, which we were grateful for. We then categorized those reports because some dealt with self-insured dental plans, which our Bureau of Insurance does not have jurisdiction over.

[00:17:21] Scott Johnson: Some dealt with government plans, which our Bureau of Insurance had no jurisdiction over, but then we categorized them by the largest writers of dental insurance and the largest number of complaints. So we developed a list, of six different dental carriers that had somewhere in the range of 25 complaints because on the grievance tracker, some individuals may have had the same problem or complaint with multiple carriers.  

[00:17:49] Scott Johnson: You know, multiple carriers were doing something on a crown buildup or multiple carriers were doing something regarding radiographs or the need of them, or the quality of them, and it expanded across dental carriers. We then scheduled video meetings with each of the dental carriers, their dental chief officer was on every one of those calls, leadership and walked through those, and in some instances we found that the carriers acknowledged that there were problems. Other instances we found that there were communication or education issues where we were able to go back to the individuals that submitted the grievance to say, this problem is occurring. You may not be aware that there was a change in a requirement, and that should make that problem go away.

[00:18:38] Scott Johnson: And even though we were looking back at these grievances, the strength and the dental grievance tracker going forward, it enables us to make a more immediate response to members. So if someone calls and complains that X, Y, Z dental carrier is doing so and so we can outreach to their governmental affairs team, we can get it to the decision-makers, we can ask that it be looked into and we can get a more ready solution. So the initial complaints gave us trends to fix and that has been successful. But anything else the ongoing efficiency of this will help us. I can't stress enough. We asked the Bureau of Insurance how many dental complaints they had received from dentists and the state regarding dental carriers because there's a process to complaint at the state level and it was virtually none.  

[00:19:31] Scott Johnson: We are mindful that some dentists feel like it may be retribution by dental carrier if they do file a complaint, but in the bureau's position, they are complaint driven. They don't. Generally take action unless there's a complaint made. We did share with the bureau all 200 of the grievances submitted to the dental tracker and that was very enlightening for them.  

[00:19:51] Scott Johnson: And it gave them a good lay of the land and what the market is. So I can't encourage you enough that if you've got a problem reported to the dental tracker, so we can be your advocate to try to help get it fixed. We don't want to guarantee that every problem will be fixed but the carriers have been very responsive to us, so far, and we do not expect that to change. 

[00:20:12] Ryan Dunn: That's right. That's a great plug for the dental insurance grievance tracker. The D.I.G. Tracker . We have a lot of anecdotal evidence from time to time or overarching sentiments that we hear or individually hear, we've all long needed to be able to quantify those collect them and speak with examples, right? That's how the bureau works. But that's also how the general assembly works. If we can see something that's happening either a differentiation between a geographic area. And things and how they're operating. Or we can see a trend statewide that we need to address.  

[00:20:58] Ryan Dunn: And not everything requires, like you said, legislation. Sometimes we can just point something out and go right to the source and try to solve that. What do we do with this information now? What are we gonna do with it? How's it gonna make a difference?

[00:21:12] Ryan Dunn: Great. We got some numbers, and now what? And. I can say that there's still more follow up we have, we want to get maybe a little bit more information. We'd like to see maybe some additional data in the future related to showing your work as to how we got to some of these numbers. That's maybe part of the discussion.

[00:21:30] Ryan Dunn: But for our members this is a really great educational tool for making decisions for your office and for what's best for you. And part of that dig tracker we want to keep track of those things as well. If we're seeing a massive amount of issues come up from one carrier versus the other.  

[00:21:51] Ryan Dunn: We wanna make our members aware of that, that's just education, that's making an informed decision and being a smart consumer. And we also, we hope in the future we can take all of both the dig tracker, what our members' testimonials are this anticipated and incurred loss ratio information.

[00:22:12] Ryan Dunn: And put it all in some meaningful way that both consumers and dentists and dental offices can make decisions that are best for them. Which carrier do I want to work with? Which carrier do I want to pay monthly? And that is really the best opportunity we have to empowering both our members and the general public.  

[00:22:38] Ryan Dunn: We will continue to update folks on how we're gonna go about doing that. But back to a little bit of the number. One of the things I think people will see, , there are three of the largest carriers, Delta, MetLife, and Anthem. They make up 61% of the large group market in Virginia. And we've got that, that data, right? So let's just pull one of them. And I think it's worth discussing maybe a little bit more in depth before we wrap up, just so people can fill in the blank. 'cause I think it took us a while, right? We had to go follow up with the bureau to be like. So , where is that number coming from? So pulling Delta as an example, right? We see that there's about a 3% difference between the incurred loss ratio at 80.69 and the actual loss ratio at 83.60. So about a 3% Um. increase in basically the administrative costs of the plan, including taxes, fraud, charitable contributions, the licensing fees and regulations and things like that. So in that that number comes to like $6.5 million difference between the actual and incurred. What did we find was the bulk of that?

[00:23:55] Scott Johnson: So we went back and did, some homework on that and outreach to the bureau and did research and basically that difference for Delta Dental for 2023 between the incurred loss ratio and the actual loss ratio, that six and a half million dollars was largely made up by what Delta has to pay to the Bureau of Insurance for insurance licensure fees. They paid in 2023 according to their Form 990. They're a tax exempt company, so they have to file that pursuant to IRS rules as a public document. But that document reflected, they paid in round numbers about $6.1 million. So that left about $400,000 to determine what the balance came from and Delta has been very good publicly reporting their charitable and community contributions and consistent with the statute, they are permitted to remove those from the actual loss calculation if those contributions are made public. And so the bureau, as do we. Track press releases, if you will, from Delta.

[00:25:01] Ryan Dunn: So when they make a contribution to a dental clinic or do something in the community and they report that, they do that usually on a calendar year basis. And the Bureau of Insurance keeps an eye on that and we do as well. So the long story short is as we would expect the difference between Delta's incurred loss ratio and actual loss ratio, was primarily made up of two things payment of fees to the Bureau and their publicly reported charitable contributions. And so that enabled us to validate that the numbers are consistent in line in what we expected. 

[00:25:36] We had to do a little digging, and this is where we were talking about, we're getting the information we need some, maybe we, we wish we had a few more uh, numbers to be able to, to kind of see, but uh, that was super helpful. And so just for my own understanding, do all of the carriers have to pay those fees to the Bureau, or is that unique because Delta doesn't pay taxes, right?  

[00:25:57] Scott Johnson: It is unique in the sense that there are several different statutory frameworks that dental carriers can be licensed and regulated under by the bureau. And the category or statute that Delta is regulated under basically says any dental carrier regulated under that code section, they will pay their fees to the bureau and that is gonna be in lieu of them having to pay any state or local taxes. Other companies that are for profit are gonna be regulated under another section and they will pay fees to the bureau, but they would also have to pay taxes as well. And so it very much is important to know how your carrier is organized, not-for-profit or not, and how your carrier is regulated under what swim lane and the Bureau's regulatory scheme. But bottom line is pretty much everybody is paying some type of fee to the Bureau. 'cause that is what the Bureau uses to conduct its business and operate. 

[00:26:55] Ryan Dunn: Got it. And that fee fluctuates as to whether they're paying state local tax. 

[00:27:00] Scott Johnson: It does, and that fee fluctuates based upon oftentimes the amount of premium written. And so you've heard of insurance premium taxes. Oftentimes fees are calculated as the percentage of direct written premium. So the more you write business, the more tax or fee you pay to the bureau.   

[00:27:21] Ryan Dunn: Again, we want to be able to educate our members as much as possible on just like all of those things. we are grateful to have , your expertise , in this, because it's complicated. Most people don't understand how it works. . It is very complicated. 

[00:27:35] Scott Johnson: It is and the most important thing, if you don't know, ask questions. If you've got concerns, ask questions. That's the only way to guarantee that we have got a good finger on the pulse of what's going on in your dental practices. So we can be responsive. 

[00:27:50] Ryan Dunn: Absolutely. And the VDA is asking a lot of those questions too. We're always, trying to understand or predict what the questions will be from our members ahead of time. That's why we really wanted to do this podcast so that we could get out in front of some of these questions. Because if you're just looking at a lot of this right now, when you look at the loss ratios that are reported, you're just looking at the answers and you're trying to work backwards to figure out how they got to that answer. And so without some of that data being very public it can be a little confusing. The picture's not fully painted, so we wanted to have this conversation so we could have the opportunity to fill in some of those, uh, uh, those happy trees in the background of the Bob Ross painting for you.  

[00:28:37] Ryan Dunn: Scott, thank you very much for your time. We will probably be bringing you back in pretty soon to, to talk further about about this because what I expect or hope is all of these people listen to this or see our emails and we get a lot of questions and I'd love to take some of those questions and bring them either to the bureau or discuss them on this format here on the podcast and and go from there. But I hope this has been helpful, Scott. Thank you. I don't know if you have anything. 

[00:29:09] Scott Johnson: Absolutely. 

[00:29:09] Ryan Dunn: You wanna wrap up or you? 

[00:29:11] Scott Johnson: I don't. I look forward to follow up and again, encourage questions. We wanna answer them. 

[00:29:17] Ryan Dunn: Thank you and uh, welcome to your first episode of being on The Fulcrum.

[00:29:22] Scott Johnson: Thank you. I'm pleasure to be here. 

[00:29:24] Ryan Dunn: Appreciate it.   

[00:29:25] Paul Logan: Thank you for joining us for this episode of The Fulcrum Podcast. We welcome your feedback on this episode and ideas for future discussions at thefulcrumpodcast@vadental.org. The VDA's Dental Insurance Grievance Tracker is an ongoing tool to allow us to report carrier practices that interfere with patient care.

[00:29:43] Paul Logan: If you have a report to make, please submit it to the dig tracker at vadental.org. Thank you.

[00:29:50] Dr. Justin Norbo: Hi, this is VDA President, Dr. Justin Nobo, asking you to save the date of September 26th and 27th for the Virginia Dental Showcase in Norfolk. This is the VDA's premier annual event and this year we'll be providing more hands-on continue education CE tracks for dental team members , along with some special new social events and opportunities to unwind.

[00:30:12] Dr. Justin Norbo: I can't wait to see you there. September 26th, 27th at the Virginia Dental Showcase in Norfolk.