How 1 dental insurer plans to grow once Massachusetts' medical loss ratio begins

Bento is stepping in to fill an forthcoming gap once Massachusetts implements its medical loss ratio for dental insurers. 

Bento offers self-funded insurance coverage options to reduce inefficiencies and unnecessary costs.

Massachusetts established a first-of-its-kind law last year that requires dental insurers to spend at least 83 percent of premium dollars on dental services or refund the difference to patients, among other requirements. Following the law's passage, Guardian stated it would no longer sell policies to companies with fewer than 25 employees once the medical loss ratio is implemented in January. 

Becker's recently spoke with several Bento execs — CEO Ram Sudiredd, Chief Sales Officer Chip Huffman and Senior Director of DSO Sales Ryan Chan — about how businesses are reacting to the medical loss ratio, how the new law affects insurers and how they plan to expand their reach.

Editor's note: Responses were lightly edited for length and clarity.

Question: How does Bento plan to fill in the insurance gap once the medical loss ratio goes into effect?

Chip Huffman: That loss ratio requirement makes it very difficult for fully insured carriers to offer a product and still hit those marks. [With Bento,] the employer can create a custom plan to their liking, to meet their employees' needs versus having to go along with what insurance companies have traditionally forced employers to in the past, so much more flexibility in the plan design. Because our system works in such a way, we easily meet that loss ratio, but even if we didn't, self-funded plans are exempt from that loss ratio requirement. So all of our clients are self-funded.

Q: How can this law affect DSO activity in Massachusetts?

Ryan Chan: There's actually a lot of traction on the DSO side for this issue specifically. For the longest time, DSOs have been trying to capture the uninsured patient base through membership plans, also known as in-office plans. So a lot of our partners have expressed interest in not just offering that in-office [plan], but maybe having a solution for small businesses that's a little more attractive. We are in some active discussions with some of the biggest DSOs in the country currently to help them capture this base, not Massachusetts specifically, although we do have partners in Massachusetts as well, but just throughout the United States.

Q: Are you preparing for more insurers to follow Guardian's lead?

Ram Sudireddy: Yeah, they have to do that or they have to increase the premiums by almost 50 percent, which is now unaffordable for small businesses. Eighty to 90 million Americans don't have dental insurance and it's not mandated. Medicaid also does not [always] have dental as part of their coverage. The insurance industry is set up with a lot of middlemen and a lot of inefficiencies. So dental insurance [companies] use old systems that cost them a lot of money to process claims and do customer support. Even if you have a $10,000 bill, [some insurers] only pay $1,000 or $1,500. That's not real insurance. Real insurance has your back when there's a catastrophe. The house burns down, they pay, the car is totaled, they pay, you have a heart disease or cancer, they pay. That's real insurance. So if you use old systems and processes, you are wasting a lot of money. That's why a lot of companies see that this is not insurance and they skip. All these guys will have a problem with small employer groups because they have to increase the premiums and there are already so many people uninsured and these small employer groups will have no choice but to drop dental coverage.

The big companies can do self-insured plans, but for them to break even and do it right, the size has to be bigger because of the systems I talked about. These are old systems and their costs for claims processing and operations are higher. So that's why they don't like to do self-funded plans for small employer groups. Right now, we don't have any competitors and we also have a patent on this. So the big company is no problem. If you have 1,000 employees or more, you're in good shape. But the smaller employers, the majority of Americans work for small employers, [so] that's where we have a problem.

CH:There are a couple of studies that were done [and] essentially what they found out was the low-cost plans, the ones that have a $25 or $27 employee premium, those plans are extremely difficult to hit that 83 percent loss ratio because the dollar amount is so low. So the really sparse dental plans that are out there, it's next to impossible for insurance companies to keep those around. The super expensive plans where they build in too much profit for themselves to cover that one person that needs a root canal or crown, those plans are easier to hit the loss ratio, but that means the insurer can only offer the expensive plans and won't be able to offer the more cost-competitive plans going forward.

Q: How much growth do you expect to see once the medical loss ratio is enacted?

RS: We should see pretty good growth. We should be doubling [our growth] come January because of what's happening, and it's being passed [in other states]. Nevada passed this already. Louisiana is working on it. West Virginia is working on it. States where there is a ballot question will pass faster. If you have to go through Congress, representatives and the senators, the biggest funding for their elections come from insurance companies. So that will take a long time.

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