Dental's Changing Landscape

Delta Dental President and CEO Tony Barth and Vice President of Public & Government Affairs, Jeff Album, recently provided their feedback on the changing dental landscape.

How has the Affordable Care Act impacted the dental insurance market for Delta Dental?

New Market Segment Gains a New Place to Shop

The Affordable Care Act (ACA) has ushered in a new and untapped market segment for Delta Dental – namely, adults who do not get dental benefits through their small employer, or are self-employed with limited access to affordable dental benefit options.

Our affiliated companies within Dentegra Group, Inc. (our holding company system) are today serving more enrollees in public exchanges by far – about 225,000 enrollees in 27 states – than any other dental carrier. In 2015, we will enter 14 additional states, so we expect this population to grow.

The plan designs for these products contain some key differences with what is generally available commercially, and from what is offered in the mid- to large-group segments. Children up to age 19 in these products have no annual maximum, are covered by a $350 out-of-pocket maximum and receive coverage for medically necessary orthodontia – not the standard ortho-coverage brokers are used to selling. Enrollees older than 19 get something much closer to traditional dental coverage with an annual maximum.

It’s About Adults, not Kids

Despite pediatric dental being regarded as “essential” under the ACA, more than 92 percent of our exchange enrollees are adults, not children. Our success in convincing HHS to allow us to sell family coverage in the exchanges (even though the ACA only specifies pediatric coverage) was critical to opening up this market and making the offer of dental inside exchanges somewhat successful — although with so much political uncertainty still surrounding the ACA we should be guarded about what “success” is, and how long it might last.

It’s Also About Dental Managed Care

Another interesting thing we see with our exchange enrollees –perhaps not that surprisingly – is how much more popular the lower-cost products are. About 80% of our exchange enrollment is through DeltaCare HMO, our lower-cost dental HMO, as opposed to Delta Dental PPO, our preferred provider organization, which is our most popular program outside of exchanges across all market segments and groups. This will likely add momentum to dental managed care generally throughout the country and is leading us to expand our DHMO into new states, wherever possible.

Pediatric dental is now one of the essential health benefits covered under the ACA.  Do you see confusion that a full dental plan is now a part of individual and small group medical plan?

Confusion Reigns Supreme When it comes to Dental

Yes, there is tremendous confusion out there among brokers and purchasers both as to when pediatric dental does or doesn’t need to be offered, and by whom. This confusion is understandable: The ACA rules concerning dental are messy and inconsistent, depending on whether we are discussing individual and small group benefits inside an exchange, or outside an exchange, and in which state.

Inconsistent Rules Inside versus Outside Exchanges

Here’s the deal: on a state exchange, a qualified health plan (QHP) can either offer its medical policy with pediatric dental (with what we call “embedded” dental) or without pediatric dental, so long as a stand-alone dental plan is also available on that exchange. This means individuals and small groups can purchase one plan that includes everything, or two plans – one medical and one dental – that pair up to cover all 10 essential benefits.

But then, a curious thing happened on the way to the 2014 implementation of exchanges. The Department of Health and Human Services (HHS) came out and said so long as both medical and pediatric dental plans are available in an exchange, people are not actually required to purchase pediatric dental. They can purchase just a stand-alone medical plan/QHP but ignore the pediatric dental altogether, even if they have children. There are no penalties from the IRS for lack of a pediatric dental plan today.

This is partly why so few children relative to all the exchange enrollment have standalone dental. We’re seeing mostly adults who just want the coverage for themselves and are willing to pay for it. Additionally, most children up to 250% the federal poverty rate already have access to dental benefits through either Medicaid or the Children’s Health Insurance Program (CHIP). They don’t need exchange dental plans.

Different Picture outside Exchanges

In the off-exchange market, however, a completely different story is at work with pediatric dental. Congress in 2010 was in a big rush to pass the ACA, and the final version contained many technical errors that a politically divided Congress was unable to fix, leading to inconsistent regulation of dental on versus off the exchanges.

Outside exchanges, the ACA mandates that every small group and individual health plan contain pediatric dental as one of the 10 essential health benefits, even for adults without children. This means state regulators won’t approve a health plan in this segment unless they see how the health plan is arranging for pediatric dental to be offered.

Reasonable Assurance the only Path to Stand-alone Dental outside Exchanges

Adding to the confusion, HHS offered up a concept called “reasonable assurance,” which can vary by state, depending on how regulators interpret it. The idea is that a small group or individual health carrier can omit pediatric dental outside an exchange, so long as that carrier is “reasonable assured” the consumer has also purchased a separate, “exchange-certified” stand-alone dental plan. Being “exchange certified” means the dental plan is certified by regulators to conform with all exchange-based rules, even though it’s offered outside an exchange, not inside.

State regulators are all over the board on this, but in the end, here is what is now happening: Health plans that have their own dental delivery systems are embedding dental outside the exchanges even while offering stand-alone medical inside exchanges. Conversely, health plans that don’t have their own internal dental delivery system (or work with a dental partner) are using reasonable assurance to sell medical on a stand-alone basis outside exchanges. That leaves brokers to pretty much mix and match which kind of dental plan is needed for their small group and individual clients, based on which kind of medical gets purchased.

Quite a mess, yes? It sounds baffling, even to us.

But the bottom line is that if a small group wants a Delta Dental plan outside an exchange, we have a product with or without the required exchange-certified pediatric coverage. The trick is to make certain kids who automatically get embedded dental with their health coverage don’t get enrolled in duplicate coverage, unless there is a need for enhanced dental coverage.

Embedded versus Stand-alone Dental Benefits

Another issue of concern is what pediatric enrollees actually get when they buy a QHP that embeds dental when compared to a stand-alone dental option. Depending on how the dental coverage is structured, it can be subject to a high combined medical-dental deductible – as high as $2,000 or more. Even some benefit-rich “Gold” plans will not cover a dental checkup until that deductible is met. Since the vast majority of children rarely have high medical expenses, this kind of structure renders the dental benefits unusable, illusory even.

Embedded dental coverage also always comes with up to a $6,600 out-of-pocket combined medical-dental maximum. This compares with stand-alone dental plans which always have low deductibles, often waived for diagnostic and preventive services and an out of pocket maximum that by regulation cannot exceed $350.

So across the board, generally speaking, stand-alone dental plans offer a lot better coverage with less patient cost sharing than embedded dental plans, although naturally, the premiums are going to look higher as well. Navigating small group and individual purchasers through all this can be  a chore — and one we are happy to help out with whenever a broker or agent wants to request that help.

Do you see any major variations of plan designs in the future given the new dental landscape of ACA?

Less about plan design, more about enrollee-level control

For now, the variation in plan design forced by the ACA are one-time and fairly one-dimensional. The rules put a strait jacket around stand-alone dental products offering pediatric coverage inside or outside exchange, while leading to a lot more variation in embedded pediatric dental coverage, which has fewer rules surrounding it.

Large group dental plans do not seem to be changing all that much, but we are all still waiting to see how large employers react to the ACA as future provisions kick in. The availability inside exchanges of health and dental coverage in 2016 for groups between 50 to 100 employees, and possibly even large groups in 2018, could lead to the need for something different than what’s typically offered today.

Considering Employee Choice

The emergence of private exchanges and the “employee choice model” as an increasingly more common platform from which an employee might select his/her own dental plan are perhaps the biggest things we see happening right now. Such a trend turns dental benefits from a business-to-business (dental plan to small group purchaser) transaction into a business-to-business-to-consumer transaction, with that consumer being the employee. Dental plans may need to turn their attention more to what the individual employee actually wants from their dental coverage, versus what the employer wants to offer and pay for. And that in turn could drive a great degree of change in dental plan designs.

Delta Dental constantly reviews and discusses plan designs internally. We are always thinking about what lower cost products might gain traction with consumers not covered today, how we might alter our networks and what plan designs might encourage wellness and prevention. We are interested in how to reward dentists for providing better care instead of more care, which in turn could lead to a different way of designing plans. As we fine-tune our offerings, we’ll certainly be talking to Morgan-White Group and others to see what market demand might exist for something new, different, and perhaps even more effective at promoting good oral health.

What wisdom do you have for a broker who enjoys selling dental in today’s changing markets?

The real key is for brokers right now is for them to know, understand and explain the difference to clients between embedded dental and stand-alone dental benefits. Brokers will want to look carefully at how their clients’ health plan deals with pediatric dental before recommending a group dental plan.

Remember that some embedded dental benefits barely cover dental at all, and they almost never covers adults. So a good company like Delta Dental – with deep command and understanding of the many confusing ACA-related rules – can usually add value. We know what is ACA-compliant, what the purchaser is and isn’t required to purchase, and how to mix and match products to fulfill the needs of our customers. We have more experience than any other carrier when it comes to inside and outside exchange products.

The silver lining to all the confusing rules laid out above is that brokers have an even greater opportunity to provide value to clients, specifically with regard to the dental part of health benefits.