July 10, Re: Comments on NAIC DMPO Model Act, draft 5/15/06. Dear Administrator Ario:

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1 the representative and recognized resource of the dental benefits industry OFFICERS & DIRECTORS Chairman JON SELTENHEIM United Concordia Companies, Inc. Harrisburg, Pennsylvania Vice Chair GENE SHERMAN, DMD Starmount Life Insurance Company Baton Rouge, Louisiana Secretary / Treasurer BRENT WILLIAMS Dental Select Draper, Utah FAY DONOHUE DentaQuest Boston, Massachusetts JOHN P. FOLEY Guardian Life Insurance Co. New York, New York GAIL M. GARCIA CIGNA Dental and Vision Care Plantation, Florida KAREN GUSTIN, LLIF Ameritas Life Insurance Co. Lincoln, Nebraska KEN KEATING, GBA SafeGuard Dental & Vision Aliso Viego, California Executive Director EVELYN F. IRELAND, CAE National Association of Dental Plans Dallas, Texas July 10, 2006 The Honorable Joel Ario Chairman, Health Insurance and Managed Care (B) Committee National Association of Insurance Commissioners 2301 McGee Street, Suite 800 Kansas City, MO Re: Comments on NAIC DMPO Model Act, draft 5/15/06 Dear Administrator Ario: The National Association of Dental Plans (NADP) appreciates the opportunity to provide comments to the full NAIC B Committee regarding the Discount Medical Plan Organization (DMPO) Model Act. NADP has submitted five previous comment letters to the discount working group concerning discount plans; encouraging regulation that protects the consumer while eliminating fraudulent companies from the discount industry. NADP is a non-profit trade association, whose member companies offer all lines of dental benefits, including dental HMOs, dental PPOs, dental indemnity and discount dental plans. Our total membership includes major commercial carriers, as well as regional and single state companies, serving over 100 million Americans with some form of dental benefits. Currently, over a third of our member plans (listed in Attachment A) offer some type of a discount dental plan to their enrollees. As requested, we have kept our comments specific to the latest DMPO draft, however NADP has background information we can provide to the committee if needed. Our hope is that you will find our suggestions below succinct, useful and with merit. Comment 1: NADP would strongly encourage the re-examination of utilizing the term medical as the title of this Model Act, as well as its usage throughout the document. NADP would recommend that the title return to its original order and be labeled as Health Discount Plan Organization Model Act. In common insurance context, the term medical often does not include the ancillary programs, such as vision and dental. This leads to confusion if the Model Act even covers ancillary programs. Health is the term that is most widely used throughout other NAIC Model Acts, including the PLHSO. NADP would like to see the term used consistently throughout the insurance community to make sure there is constant understanding and application. This terminology has the potential of setting a confusing precedent among the industry that NADP has worked very hard to avoid in making certain that there is a clear difference between the terms medical and health LBJ Freeway Suite 935 Dallas, Texas FAX

2 Comment 2: NADP would advocate lessening the restrictions on licensed insurers to eliminate duplicative regulations, therefore easing costs for the state agencies as well as the plans. The replicated sections include Section 10, Charge and Form filing Requirements, Section 11, Provider Agreements / Provider Listing Requirements and Section 15, Annual Reports. NADP would encourage the edits below: Section 4. Applicability and Scope B (2) Is required to comply with Sections 9, 10, 11, 12, and 13 of this Act and report any of the information described in Section 15 of this Act in the form and manner as the commissioner may require. Comment 3: NADP would recommend replacing the licensing requirement in Section 5, with a more streamlined process of registration under the Commissioner. NADP acknowledges the need for a Commissioner to account for discount plans that operate in their state, and by allowing a flexible registration versus a stringent licensing program, the state will still have a listing of the companies operating in their state without the large resources needed to account for all the paperwork currently required in this draft. The discount plans must still conform to mandates within the Act, including the marketing restrictions, which was the basis for this Act, and will quickly eliminate the deceptive businesses. Registration, rather than full licensing would mitigate the administrative burden on a Commissioner s staff as well as the registering discount plan. Many proposed state laws have not required licensing or registration due to the financial burdens that would impose on their agencies, and by clearly stating the boundaries that discount plans must adhere to, they have eliminated the need for registration. These states include: Alaska, Arkansas, North Dakota and Ohio. Other state legislators have chosen the option that requires discount plans to register with their state and provides flexibility for the forms and requirements to the appropriate state agency: Maryland requires registration by discount plans, utilizing state agency forms (to be drafted by the agency) and specifies renewal dates; Montana requires a certificate of registration requesting sound finances, understanding of the industry, must be in good standing, and gives discretion to the agency on usage of forms and further requirements; South Dakota mentions registration but allows for complete flexibility by the agency. For a complete listing of various state mandates, please see NADP s State Discount Grid spreadsheet. Regarding the actual text, NADP would recommend Montana s verbiage on registration, while incorporating what is currently drafted by the NAIC: Section 5. Licensing Requirements A. Before doing business in [or from] this state as a discount medical plan organization, a person other than an individual: (1) Shall be authorized to transact business in this state under [insert reference to applicable state law]; and (2) Shall register with the Commissioner to operate as a discount medical plan organization. B. An application to the commissioner for a certificate of registration must be accompanied by the applicable fees [insert reference to appropriate section in state law.] The commissioner shall issue the certificate unless the commissioner determines that the discount medical plan organization: (1) is not financially responsible, - 2 -

3 (2) does not have adequate expertise or experience to operate a discount medical plan organization, or (3) is not of good character, or (4) has had a previous application for a certificate of registration denied, revoked suspended, or terminated for cause or is under investigation for, or (5) has been found in violation of a statue or regulation in another jurisdiction within the previous 5 years. C. A discount medical plan organization shall renew its certificate of registration annually. The certificate will expire on the anniversary of its issuance, unless appropriate registration or renewal forms are filed. Once issued or renewed, the certificate continues in effect for 1 year unless suspended, revoked, or terminated by the Commissioner. D. A certificate of registration may be suspended or revoked if, after notice and hearing, the commissioner finds that the discount medical plan organization has violated provisions in this Act, or that the discount medical plan organization is not financially responsible or competent. The discount medical plan organization shall proceed, immediately following the effective date of the order of revocation, or in the case of a non-renewal, the date of expiration of the license, to wind up its affairs transacted under the license. The discount medical plan organization shall not engage in any further advertising, solicitation, and collection of fees or renewal of contracts. E. Each licensed discount medical plan organization shall notify the commissioner immediately whenever the discount medical plan organization s license, or other form of authority, to operate as a discount medical plan organization in another state is suspended, revoked, or non-renewed in that state. F. A provider who provides discounts to his or her own patients without any cost or fee of any kind to the patient is not required to obtain and maintain a license under this Act as a discount medical plan organization. Drafting Note : Subsection B is optional for those states that wish to require discount medical plan organizations to register with an application instead of a non-registration process. NADP has been encouraged by the progress of the discount working group and the resulting DMPO draft. To include our few additional changes, would ease administrative burdens while continuing excellent consumer protection. We would be happy to share any additional information you may find useful, and am grateful for this opportunity. Respectfully, Kris Hathaway Director of Government Relations NADP-National Association of Dental Plans Ph: x111 (CST) khathaway@nadp.org - 3 -

4 ATTACHMENT A NADP Members and their Affiliates: Last Updated: Aetna Dental Altus Dental Insurance Company American Dental Alliance, Inc. American Dental Partners American Dental Professional Services American National Life Insurance Co. AmeriPlan USA Corp Ameritas Life Insurance Corp. Anthem Blue Cross Appleton Dental Plan Assurant Employee Benefits Atlantic Dental Avia Dental Plan, Inc. BC Life and Health Best Life & Health Insurance Company Blue Care Network Blue Cross Blue Shield NC Blue Cross Blue Shield of FL Blue Cross Blue Shield of GA Blue Cross Blue Shield of IL Blue Cross Blue Shield of MA Blue Cross Blue Shield of MI Blue Cross Blue Shield of MO Blue Cross Blue Shield of NC Blue Cross Blue Shield of NM Blue Cross Blue Shield of RI Blue Cross Blue Shield of SC Blue Cross Blue Shield of TN Blue Cross Blue Shield of TX Blue Cross Blue Shield of WI Blue Cross Blue Shield of WV Blue Cross of CA Canada Life Central Minnesota Group Health Inc CIGNA Dental & Vision Care Citizens Security Life Insurance Co. Community Dental Services (Smile Care) CompBenefits Corporation CoreSource Custom Benefit Advisors, Inc. DBA - Preferred Administrators Delta Dental of MA Delta Dental of MO Delta Dental of RI Delta Dental of SC Delta Dental Plan of MI, IN, OH DENCAP Dental Plans DENCAP Dental Plans Denex Denta-Chek of Maryland, Inc. Dental Care Plus Group, The Dental Care Plus, Inc. Dental Economics, LLC Dental Health Alliance, LLC Dental Health Services Dental Health Services of America Dental Health Services, Inc. Dental Management Services Dental Network of America, Inc. Dental Network Services Dental Plans of America Dental Select Dental Services of MA Dental Solutions Plus Dental Source of KS Dental Source of MO Dental Technologies, Inc Dental-Net, Incorporated DentalPlans.com DentaQuest DentCare, Inc. a KY corp. Dentemax DentiCare DHS Services, Inc. Dominion Dental Services USA, Inc. Doral Dental USA, LLC Educators Mutual Ins. Association of UT Employers Dental Service Essex Dental Benefits Executive Benefit Services, Inc. FG Associates Fidelity Security Life First Ameritas Life Insurance Corp First Commonwealth First Dental Health First Dental Health First Fortis Life Insurance Co. Florida Combined Life Insurance Company Fortis Benefits Insurance Co. Fortis Dental Benefits GE Wellness Plan GEHA Georgia Dental Plan, Inc. GHI HMO Select Golden West Dental & Vision Group Dental Service Group Health Inc. Group Health Plan Inc GroupLink Reinsurance Company LTD GroupLink, Inc. 4

5 Guarantee Trust Life Guardian Life Insurance Co. of America, Inc Health Care Service Corp Health Resources, Inc. HealthPartners Administrators, Inc. HealthPartners Research Foundation HealthPartners, Inc. HealthRisk Resource Group, Inc HIP Health Plan of New York Horizon Healthcare Dental Humana Dental Illinois Pacific Dental International Dental Plans, Inc. Jefferson Pilot Financial Jefferson Pilot LifeAmerica Kaiser Permanente Dental Care Program Liberty Dental Plan of California Lifewise Assurance Lifewise Health Plan MAMSI Managed Dental Care MetLife Meyer Disability Consulting Midwest Assurance Company Mountain State Blue Cross Blue Shield National Guardian Life National Guardian Life Insurance Co. National Pacific Dental Nevada Dental Associates Nevada Pacific Dental Nippon Life Insurance Company Oral Health Services OraQuest Dental Plans Oxford Health Plans Pacific Union Dental PacifiCare Dental & Vision PacificDental Benefits, Inc. PPO USA, Inc. Preferred Product Network Premera BCBS of AK Premera Blue Cross Principal Financial Services Corporation Principal Bank Principal Commercial Funding, LLC Principal Commercial Acceptance, LLC Principal Development Investors LLC Principal Enterprise Capital LLC Principal Financial Advisors Principal Financial Group Principal Global Investors, LLC Principal Life Insurance Company Principal Management Corporation Principal Net Lease Investors, LLC Principal Real Estate Investors LLC Princor Financial Services Corporation Professional Pensions Protective Marketing Enterprises Provider Dental Plans Renaissance Health Inc. Co. of NY Renaissance Life & Health Ins. Co. SafeGuard Dental and Vision SafeGuard Health Enterprises, Inc. SafeGuard Health Plans, Inc. SafeHealth Life Insurance Company Security Life Insurance Company of America Shenandoah Life Insurance Company SmileCare Southland National Insurance Corporation Spectera United Healthcare Dental. Spectrum Asset Management Standard Insurance Company Starmount Life Insurance Co. Strategic Health Alliance Total Dental Administrators Trustar Retirement Services Trustmark Life Insurance Company UDC Dental California, Inc. UDC Life and Health Insurance Company Unicare Health Ins. Co. of the Midwest Unicare Life and Health Insurance Co. Union Security Ins. Co. Union Security Life Ins. Co. of NY United Concordia Companies, Inc. United Concordia Life & Health United Dental Care Insurance Co. United Dental Ins. Co. United Health Care Washington Dental Service WellPoint Dental Services Western Dental Services, Inc. Willamette Dental Group, P.C. Willamette Dental Insurance, Inc. Willamette Dental Management Corporation 5