Section 156.06 - Submission and Review of Rate Filings(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; andb. individual accounts and covered Individuals/dependents renewing by month; and3. 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; and4. 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; and12. 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;8. Board, bureau or association fees; and(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; and9. 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 on2.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; and3. 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; and2. 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; and3. 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; and4. 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.Adopted by Mass Register Issue 1519, eff. 4/12/2024.