Fantasy vs Fact: Your Guide to Dental Membership Plan Compliance

Regulatory compliance can feel overwhelming, especially when it involves deciphering dense legal language and technical documents. This is no different when it comes to the rules and regulations surrounding dental membership plans.

Whether you’re an independent office, group practice, or DSO, we’re here to simplify the process, break down the legalese, and guide you in confidently managing compliance for your membership plan.

A dental membership plan is, by definition, a discount medical plan. Charging a consumer a fee for access to free or discounted health care services is the defining characteristic of a discount medical plan (DMP), regardless of what the plan may be called.

DMPs are currently regulated in a total of 35 states, with 25 of those states requiring that the discount medical plan operator (or DMPO) register or obtain a license from the state insurance department (or similar agency) prior to engaging in any DMPO activity.

While DMPs are NOT insurance, they may be regulated in much the same way because state regulators want to ensure that consumers are protected and get what they pay for by creating enforceable standards for DMPO activity.

Remember, there are no “magic words” that will render your membership plan immune from regulatory enforcement; if you could opt out of regulation by simply changing the name of your product, there would be no regulated entities.

Any time a patient is charged a fee for access to free or discounted services, the patient is participating in a DMP. There appears to be a common belief that an office that offers a membership plan to its own patients is not operating a discount medical plan that is subject to regulation. Unfortunately, this belief is unsupported by the plain language of the law.

Because providers frequently offer informal discounts to their own self-pay patients, many states have included a specific exception for this type of activity within their DMPO statutes. However, this exception is not total: it only applies when the discount is provided “without any cost or fee of any kind to the patient.”

None of the states that regulate discount plans have created an express statutory exception for providers who charge their own patients a fee for access to discounts.

State penalties for operating a noncompliant DMP can be significant, including administrative actions, civil and criminal penalties, and monetary fines. Further, a regulatory injunction creates the potential for disruption or outright termination of the plan itself, which could undermine patient confidence and reduce patient loyalty. As a result, the relative stakes associated with noncompliance can be exceptionally high.

When it comes to your practice and your patients, ensuring membership plan compliance isn’t just a precaution — it’s a necessity to protect your reputation, your business, and the care you provide.

Many SaaS platforms that offer membership plan software disclaim responsibility for regulatory compliance, effectively shifting liability to the dental provider when state regulators come knocking. Some platforms even recommend that dental providers consult their own legal counsel to determine whether their membership plan will be compliant with state DMP regulations. Protect yourself by carefully reviewing your platform’s terms of use and any relevant disclosures, or simply take their advice and hire an attorney. (You may need one!)

When shopping for a membership plan partner, it’s important to get clarity on compliance during the sales process. Don’t be afraid to ask questions and push for detailed answers.

DMPO licensure can be a lengthy, expensive process. Licensure and compliance represent a significant barrier to entry and a substantial investment of time and resources, including creation of compliant agreement forms, fee schedules, marketing materials and websites, staffing for telephone support, payment of state licensure and surety bond fees, adhering to filing schedules and requirements, and other ongoing administrative costs.

While the licensure process in many states typically takes 60-90 days, it can take several months (or even years) to get licensed. Costs can also be high, ranging from $500 on the low end to several thousand dollars in fees and bonds, not including any attorney’s fees you might incur along the way.

Compliance is often overlooked when it comes to dental memberships and, it can mean the difference between growing a successful plan and getting caught up in red tape. With Clerri you can rest assured your plan meets the requirements wherever your practice operates.

Avoid the consequences of non-compliance

Failure to maintain the right license can result in serious consequences. Clerri compliance infrastructure protects you from administrative actions, fines, disgorgement of enrollment fees, and suspension or termination of the plan.

Save time and money in filing

The administrative lift required to file and maintain a license can be extensive, but we’ve already done the work for you. We’re licensed nationally — even in states with challenging regulatory schemes like California and Washington.

Trust that materials are compliant

Compliance touches every facet of your membership plan, from plan design to marketing materials, fee schedules, member agreements, required disclosures, and more. We apply our experience to make sure your plan checks all of the right boxes.

The information provided in this e-book is for informational purposes only and does not, and is not intended to, constitute legal advice. Information in this e-book may not constitute the most up-to-date information. All liability with respect to actions taken or not taken based on the contents of this e-book are hereby expressly disclaimed. The content in this e-book is provided “as is;” no representations are made that the content is error-free.

Dental membership plan(s) are NOT INSURANCE. Plan members pay periodic membership fees in exchange for access to discounts on certain identified dental services rendered by participating providers in accordance with the plan fee schedule. Plan members are obligated to pay dental providers directly for services rendered. Dental membership plans are not qualified health plans under the Affordable Care Act, and do not meet the minimum creditable coverage requirements under M.G.L.c. 111M and 956 CMR 5.00. Kleer and Membersy is not affiliated with or endorsed by any state insurance department. To obtain additional information about dental membership plans, please call (877) 545-4188 or email questions to [email protected].