Code of Massachusetts Regulations
211 CMR - DIVISION OF INSURANCE
Title 211 CMR 156.00 - Dental Insurance
Section 156.06 - Submission and Review of Rate Filings
Universal Citation: 211 MA Code of Regs 211.156
Current through Register 1531, September 27, 2024
(1) Definitions. For rate filings submitted pursuant to 211 CMR 156.06(2), the following definitions also shall apply:
(a)
Capital Costs and Depreciation Expenses. All expenses
associated with depreciation (depreciation for electronic data processing,
equipment, software, and occupancy); capital acquisitions (acquisition of
capital assets, including lease payments that were paid or incurred during the
year); capital costs on behalf of a clinic (expenditures for capital and lease
payments incurred or paid during the year on behalf of a clinic; or part of a
partnership, joint venture, integration, or affiliation agreement); and other
capital (other costs that are directly associated with the incurring of capital
costs, such as legal or administrative costs, incurred or paid during the
year).
(b)
Charitable
Contributions Expenses. All contributions to tax-exempt
foundations and charities, not related to the company business
enterprises.
(c)
Claim
Completion Method. Any actuarial method used to quantify Claims
which have been incurred but not yet paid.
(d)
Claims Operations
Expenses. All expenses associated with Claims adjudication and
adjustment of Claims, appeals, Claims settlement, coordination of benefits
processing, maintenance of the Claims system, printing of Claims forms, Claim
audit function, electronic data interchange expenses associated with Claims
processing, and fraud investigation.
(e)
Distribution
Expenses. All expenses associated with distribution and sale of
dental products, including commissions, producer, broker and benefit consultant
fees, other fees, commission processing, and account reporting to brokers,
agents, and producers.
(f)
Financial Administration Expenses. All expenses
associated with underwriting, auditing, actuarial, financial analysis,
investment-related expenses (not included elsewhere), treasury, and
reinsurance.
(g)
General Administration Expenses. All expenses
associated with payroll administration expenses and payroll taxes (salaries,
benefits and payroll taxes); real estate expenses (company building and other
taxes and expenses of owned real estate, excluding home office employee
expenses and rent [not allocated elsewhere] and insurance on real estate);
regulatory compliance and government relations (federal and state reporting,
rate filing, state and federal audits, tax accounting, lobbying, licensing and
filing fees, preparation and filing of financial, utilization, statistical and
quality reports, and administration of government programs); board, bureau, or
association fees (Board of Directors, Bureau and association fees paid or
expensed during the calendar year); other administration (information
technology, senior management, outsourcing [not allocated elsewhere], insurance
except on real estate, equipment rental, travel [not allocated elsewhere],
certification and accreditation fees, legal fees and expenses before
administrative and legal bodies, and other general administrative expenses);
and negative adjustment for reimbursement from uninsured plans (all revenue
receipts from uninsured plans [including excess pharmaceutical rebates and
administrative fees net of expenses] and reimbursements from fiscal
intermediaries, including administrative fees net of expenses from the
government).
(h)
Marketing and Sales Expenses. All expenses associated
with billing and Member enrollment (group and individual billing, Member
enrollment, premium collection, and reconciliation functions); customer service
and Member relations (individual, group or provider support relating to
membership, enrollment, grievance resolution, specialized phone services and
equipment, consumer services, and consumer information); product management,
marketing and sales (management and marketing of current products, including
product promotion and advertising, marketing materials, changes or additions to
current products, sales, pricing, and enrollee education regarding coverage
prior to the sale); and product development: (product design and development
for new products not currently offered, major systems development associated
with the new products, and integrated system network development).
(i)
Dental Administration
Expenses. All expenses associated with quality assurance and cost
containment (dental and disease management and wellness initiatives other than
for education), Dental Care quality assurance, appeals, case management, fraud
detection and prevention, utilization review, practice protocol development,
peer review, outcomes analysis related to existing products, nurse triage,
dental management, and other Dental Care evaluation activities; wellness and
dental education (wellness and dental promotion, disease prevention, Member
education and materials, and outreach services); and dental research (outcomes
research, dental research programs, and development of new dental management
programs not currently offered, major systems development, and integrated
system network development).
(j)
Miscellaneous Expenditures Expenses. All other
expenses that are not classified expenses, including all collection and bank
service charges, printing, office supplies, postage, and telephone (not
allocated elsewhere).
(k)
Network Operations Expenses. All expenses associated
with provider contracting negotiation and preparation, monitoring of provider
compliance, field training with providers, provider communication materials and
bulletins, administration of provider capitation and settlements, dentist
relations, dental policy procedures, network access fees, and
credentialing.
(l)
Taxes, Assessments and Fines Paid to Federal, State or Local
Governments (as Expenses). All expenses associated with taxes
(including, but not limited to, state premium taxes, state and local insurance
taxes, federal taxes, except taxes on capital gains, state income tax, state
sales tax, and other sales taxes not included with the cost of goods
purchased); assessments, fees and other amounts paid to regulatory agencies
(assessments, fees, or other amounts paid to state or local government, but
does not include taxes or fines or penalties paid to any government agency);
and fines and penalties paid to regulatory agencies (penalties and fines paid
to government agencies).
(2) Content of Rate Filings. A Carrier's submission shall be submitted in a format specified by the Commissioner and shall show the company's development of the filed rates, explaining how they apply to each Market in which the Carrier offers coverage. The filing shall contain at least the following information:
(a) Summary rate information for each
product, including:
1. proposed rate change
compared to rates in effect 12 months before proposed effective date;
2. number of currently enrolled Members
impacted by the proposed rate change, presented as:
a. number of Employer Groups and covered
employees/dependents renewing by month; and
b. individual accounts and covered
Individuals/dependents renewing by month; and
3. maximum increase for any Employer Group or
Individual covered under the proposed rate change.
(b) Number of Member months of coverage
reported for each of the latest available 12 months for products issued or
renewed, as well as the number of Member months projected to be impacted by the
proposed rate increase.
(c) A
three-year history of premium, dental Claims (including capitation and
non-Claims expenses) for the Carrier's Massachusetts book of business and
national book of business, separating by Market, where applicable,
differentiating among:
1. preventive Dental
Care visits and cleanings;
2. basic
restorative Dental Services;
3.
major Dental Services; and
4.
orthodontic care.
The analysis should explain any differences between what is included in the filing and what normally is included in the Carrier's financial statements. The Carrier also should submit proposed assumptions about Trend in Dental Care Expenses. Annual price and use assumptions for Trend in Dental Care Expenses for fee-for-service expenses should be provided for each year in the projection period, and the Carrier must indicate how many months of each year are used in the analysis. The Carrier should indicate where leverage assumptions are included. Trend in Dental Care Expenses for fee-for-service expenses should reflect provider price increases whereas utilization may include mix of services and mix of providers. The Trend in Dental Care Expenses for fee-for-service expenses information should include the actuarial basis for all changes in Trend in Dental Care Expenses for fee-for-service expenses, including all relevant studies used to derive the factors.
(d) The Carrier's administrative
expenses and per Member per month administrative expenses relevant to products
issued or renewed and used in the development of the filing, for the two years
prior to the submission of the rate filing for each of the following
categories:
1. expenses for capital costs and
depreciation;
2. expenses for
charitable contributions;
3.
expenses for Claims operations;
4.
expenses for distribution;
5.
expenses for financial administration;
6. expenses for general
administration;
7. expenses for
marketing and sales;
8. expenses
for dental administration, with specific detail on costs related to programs
that improve Dental Care quality;
9. expenses for miscellaneous expenditures
described in detail;
10. expenses
for network operations;
11.
expenses for taxes, assessments and fines paid to federal, state or local
governments; and
12. total
administrative expenses [subtotaling
211
CMR 156.06(2)(d)1. through
11.].
The Carrier also should submit projected increases in administrative expenses per Member per month that the Carrier is using to project administrative expenses forward to the period for which the rates will be effective. The trend information should include an explanation for all significant changes in the Carrier's administrative expenses due to one-time costs, including where changes in administrative expenses may be caused by regulatory requirements or efforts to contain Dental Care delivery costs, an explanation of the projected cost and cost per Member per month that can be attributed to each regulatory requirement or effort to contain Dental Care delivery costs, and the method that the Carrier is using to allocate any companywide expenses to the dental line of business.
(e) The Carrier's contribution to
surplus, relevant to products issued or renewed according to M.G.L. c. 176X,
both in the aggregate, on a normalized per-Member-per-month basis, and as a
percentage of premium for the two years prior to the submission of the rate
filing. The Carrier also should identify the contribution to surplus included
in the rate filing on a per-Member-per-month basis and as a percentage of
premium and should provide a detailed explanation of the reasons that the
contribution to surplus has been filed at that level, as well as the
contribution to surplus levels that the Carrier is using in all other lines of
coverage. The Carrier should describe the method used to quantify the
contribution to surplus in the proposed rates.
(f) The three-year historic Actual Dental
Loss Ratio for the rates, relevant to products issued or renewed, and the
Projected Dental Loss Ratios for the one-year period during which rates will be
in effect.
(g) Methodology for
Calculating and Reporting Dental Loss Ratio (DLR), for the purposes of M.G.L.
c. 176X, § 2(d), the DLR of a Dental Benefit Plan shall be calculated and
reported on a calculation worksheet defined by the Commissioner and based on
the current federal methodology used by the federal Centers for Medicare and
Medicare Services (CMS) for calculating and reporting Medical Loss Ratio
rounded to the third decimal place. Unless contrary to the current CMS
methodology for calculating and reporting DLR, or unless otherwise determined
by the Commissioner, the following items shall be deemed to be an
Administrative Cost Expenditure for the purposes of calculating and reporting
the Dental Loss Ratios of Dental Benefit Plans for M.G.L. c. 176X:
1. Financial administration
expenses;
2. Marketing and sales
expenses;
3. Distribution
expenses;
4. Claims operations
expenses;
5. Dental administration
expenses, such as disease management, care management, utilization review, and
dental management activities;
6.
Network operations expenses;
7.
Charitable expenses;
8. Board,
bureau or association fees; and
9.
Payroll expenses.
(h) A
detailed description of any cost-containment programs the Carrier is employing
or will employ during the Rating Period to address Dental Care delivery costs
and the realized past savings and projected savings from all such
programs.
(i) An Actuarial Opinion
and an actuarial memorandum developed and prepared by a qualified member of the
American Academy of Actuaries that also includes the following:
1. Effective dates of the filed
rates;
2. Whether the company
intends to trend filed rates using a trend factor for future effective
dates;
3. The trend factor and
annual trend assumption, including the annual cost and utilization trend
assumptions;
4. Trend exhibits
supporting how trends were derived;
5. An exhibit that shows the most recent
available experience for Massachusetts;
6. A statement describing the rating factors
and method used to calculate Individual, Employer Group, and Group Association
premiums;
7. If a Carrier uses
prior experience in developing premiums, a description of how the Carrier
develops Group Association or Employer Group premiums;
8. A description of how the proposed Base
Rates were developed, including experience used, trend assumptions used, and
any other adjustments used; and
9.
The average rate increase resulting from the proposed rates.
(j) A rate manual and
demonstration of the used manual to calculate a sample premium rate.
(k) A description of the products for which
the rates are being proposed, including a summary of benefits as well as the
ranges of cost-sharing elements (the ranges of deductibles, coinsurance,
copayments, benefit limits, out-of-pocket maximums), including any that differ
by relevant service categories.
(l)
Any other information requested by the Commissioner.
(3) Review of Rate Filings.
(a) All Base Rate
changes and Rating Adjustment Factors are subject to disapproval if they do not
meet the requirements of 211 CMR 156.00.
(b) A Carrier shall respond to any request
for additional information by the Division within five business days of the
date of the Division's request. Failure to respond to the Division's request
within five business days may result in a delay of the Division's review of the
filing and a delay in the proposed effective date of the filed rates.
(c) Every Carrier shall include a cover
letter summarizing the content in
211
CMR 156.06(2)(d), (e) and
(f). Base Rates will be presumptively
disapproved as excessive if the rate filing does not meet the following
standards:
1.
Administrative
Expense Standards. Base Rates will be presumptively disapproved if
the filing's projected administrative expense loading component, not including
taxes and assessments and Quality Improvement Activity expenses, increases by
more than the Dental Services consumer price index (U.S. city average, all
urban consumers, not seasonally adjusted).
a.
The projected administrative expense loading component is the
per-Member-per-month administrative expense described in
211
CMR 156.06(2)(d).
b. The most recent calendar-year increase in
the Dental Services consumer price index (U.S. city average, all urban
consumers, not seasonally adjusted) shall be calculated by dividing the index
value for the December period preceding the date of the filing by the same
index value from the December period on
2.
Contribution to Surplus
Standards. Base Rates will be presumptively disapproved as
excessive if the rate filing's contribution-to-surplus loading component
exceeds 1.9% of the total filed Base Rate. The contribution-to-surplus loading
component shall represent the per-Member-per-month contribution-to-surplus
amount submitted in
211
CMR 156.06(2)(e).
3.
Projected Dental Loss Ratio
Standards. Base Rates will be presumptively disapproved as
excessive if the rate filing's projected aggregate dental loss ratio for all
plans offered across all dental Markets is less than the Minimum Dental Loss
Ratio.
(4) Presumptive Disapprovals Issued Pursuant to M.G.L. c. 176X, § 2(d).
(a) Rate filings may be
presumptively disapproved by the Commissioner as described in
211
CMR 156.06(3).
(b) If a Carrier's filing is presumptively
disapproved, the Commissioner shall notify the Carrier in writing within five
business days of the annual rate filing submission stating the reason(s) for
the presumptive disapproval.
(c)
When initial Base Rates are presumptively disapproved, the associated Dental
Benefit Plans may not be offered.
(d) Within ten days of receipt of the
presumptive disapproval, the Carrier shall communicate to all employers and
Individuals covered under a Dental Benefit Plan approved under M.G.L. c. 176X
that the proposed rate change has been presumptively disapproved and will be
subject to a public hearing at the Division.
(e) In the event of a presumptive
disapproval, the Carrier shall comply with the following procedures:
1. the Carrier shall not quote, issue, make
effective, deliver, or renew Dental Benefit Plans in the Commonwealth using
disapproved Base Rates. The Carrier shall quote, issue, make effective,
deliver, or renew all Dental Benefit Plans using Base Rates in effect 12 months
prior to the proposed effective date of the presumptively disapproved Base
Rates. In recalculating premiums, the Carrier must apply the Rating Adjustment
Factors in effect 12 months prior to the proposed effective date of the
presumptively disapproved Base Rates;
2. the Carrier shall recalculate applicable
rates for all affected Dental Benefit Plans and shall issue rate quotes and
make all Dental Benefit Plans available through all distribution channels, but
in no event more than ten calendar days after the Carrier's receipt of the
presumptive disapproval; and
3. the
Carrier shall promptly provide notice of all material changes to the
evidence(s) of coverage to all affected Individuals and groups.
(f) With respect to the hearing
for the presumptive disapproval:
1. the public
hearing shall be scheduled within 15 calendar days of the submission of a
complete rate filing; and
2. notice
of the public hearing will be given to, or advertised in, newspapers in Boston,
Brockton, Fall River, Pittsfield, Springfield, Worcester, New Bedford, and
Lowell and posted to the Division's website.
3. The purpose of the public hearing will be
to provide the Carrier with the opportunity to rebut the reasons for the
presumptive disapproval. For purposes of
211
CMR 156.06(5)(f) the
administrative record to be considered at the public hearing will be limited to
the materials and information included in the Carrier's presumptively
disapproved rate filing submitted pursuant to
211
CMR 156.06.
(5) Disapprovals Issued Pursuant to M.G.L. c. 176X, § 2(c).
(a) Rate filings also shall be disapproved by
the Commissioner if the benefits provided therein are unreasonable in relation
to the rate charged, or if the rates are excessive, inadequate, or unfairly
discriminatory, or do not otherwise comply with the requirements of M.G.L. c.
176X or 211 CMR 156.00.
(b) New
Rating Adjustment Factors or changes to previously allowed Rating Adjustment
Factors shall be disapproved by the Commissioner if found to be discriminatory
or not actuarially sound.
(c) New
Dental Benefit Plans whose initial Base Rates are disapproved may not be
offered.
(d) If the Commissioner
disapproves a Carrier's proposed Base Rate(s), proposed new Rating Adjustment
Factors, or proposed changes to previously allowed Rating Adjustment Factor(s),
the Commissioner shall notify the Carrier and state the reason(s) for the
disapproval, including whether the disapproval is presumptive. Unless otherwise
determined by the Commissioner, if the Commissioner disapproves a Carrier's
proposed Base Rate(s) or proposed changes to Rating Adjustment Factor(s), the
Commissioner shall notify the Carrier in writing no later than August
15th of the year preceding the rates' proposed
effective date, stating the reason(s) for the disapproval.
(e) In the event of a disapproval, the
Carrier shall comply with the following procedures:
1. the Carrier shall not quote, issue, make
effective, deliver or renew Dental Benefit Plans in the Commonwealth using
disapproved Base Rates and the Carrier shall quote, issue, make effective,
deliver, or renew all Dental Benefit Plans using Base Rates and Rating
Adjustment Factors as in effect 12 months prior to the proposed effective date
of the disapproved Base Rates;
2.
the Carrier shall recalculate applicable rates for all affected Dental Benefit
Plans and shall issue rate quotes and make all Dental Benefit Plans available
through all distribution channels, including Intermediaries, the Connector,
licensed insurance producers and the Carrier's website, but in no event more
than ten calendar days after the Carrier's receipt of the disapproval;
and
3. the Carrier shall promptly
provide notice of all material changes to the evidence(s) of coverage to all
affected Individuals and groups.
(f) The Commissioner retains the right to
disapprove a rate filing for reasons other than those identified upon review of
the rate filing.
(g) Hearings on
disapprovals issued pursuant to M.G.L. c. 176X, § (2)(c):
1. within ten days of receipt of the
disapproval, the Carrier may request a hearing on the disapproval;
2. the Division shall schedule a hearing
within 15 calendar days of receipt of the Carrier's request;
3. the purpose of the hearing will be to
consider whether the disapproval is supported by substantial evidence and not
based upon an error of law; and
4.
The Commissioner shall issue a written decision either affirming or rejecting
the disapproval within 30 days after the conclusion of the hearing.
(6) Appeals. Any final order, decree, or judgment of the Massachusetts Superior Court or appellate court modifying, amending, annulling, or reversing a decision of the Commissioner disapproving a rate filing, and any further decision of the Commissioner pursuant to such an order, decree, or judgment that affects the overall rate not disapproved shall be effective as ordered.
(7) Maintaining Records. Every Carrier must maintain at its principal place of business a complete and detailed description of its rating practices including information and documentation that demonstrates that its rating methods and practices are based upon commonly accepted actuarial assumptions, in accordance with sound actuarial principles, and in compliance with the provisions of 211 CMR 156.00.
(8) Methodology for Calculating and Reporting Refund, Rebate or Credit Calculations.
(a) Unless otherwise determined by the
Commissioner, for the purposes of M.G.L. c. 176X, § 2(d), Carriers are to
calculate and submit a rebate calculation form as designated by the
Commissioner each calendar year by July 31st for the
previous calendar year.
(b) If the
calculation illustrates that a refund or rebate is warranted, the Carrier shall
submit a detailed plan for the Commissioner's approval that will provide a
detailed description of the manner in which the Carrier will refund the excess
premium to those Individuals or employers who were covered during the prior
calendar year, or an explanation of the reasons that the Carrier proposes not
to make a refund or rebate. The amount of the rebate will be based on each
Individual's or Employer Group's relative share of the premiums that were paid
to the Carrier during the prior calendar year.
(c) If the calculation illustrates that a
refund or rebate is warranted, a Carrier shall communicate within 30 days to
all Individuals and Employer Groups that were covered under Dental Benefit
Plans during the relevant 12-month calendar year that such Individuals and
Employer Groups qualify for a refund, which may take the form of either a
refund on the premium for the applicable 12-month period, or if the Individual
or Employer Group is still covered by the Carrier, a credit on the premium for
the subsequent 12-month period.
(d)
The basis for all refunds issued shall equal the amount of a Carrier's earned
premium that exceeds the amount necessary to achieve the Minimum Dental Loss
Ratio, as reported to the Commissioner. The Commissioner may authorize a waiver
or adjustment of the refund requirement if the Commissioner determines premium
credits are not feasible and that issuing such refunds would result in
Financial Impairment for the Carrier, or if the Commissioner determines that
such refunds are de minimus because the cost of distributing
any refund exceeds the value of the refund itself. The aggregate of any
de minimus amount not refunded shall be used to reduce overall
premiums.
(e) Refunds shall be paid
annually by August 30th, or another date as
determined by the Commissioner, following the calendar year of the rebate
calculation.
(f) Carriers who issue
refunds shall keep records of all refunds made to affected Individuals and
groups for inspection by the Division.
(g) No Individual or Employer Group may
assign its or their rights to such premium adjustments to another person or
entity.
(h) If a Carrier fails to
make refunds, rebates, or premium adjustments acceptable to the Commissioner,
the Commissioner may order premium adjustments, refunds or premium credits as
deemed necessary.
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