The Honorable Bill Owens Governor, State of Colorado 135 State Capitol Denver, Colorado VIA Electronic Mail:

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1 the representative and recognized resource of the dental benefits industry OFFICERS & DIRECTORS May 23, 2006 Chairman JON SELTENHEIM United Concordia Companies, Inc. Harrisburg, Pennsylvania Vice Chair GENE SHERMAN, DMD Starmount Life Insurance Company Baton Rouge, Louisiana The Honorable Bill Owens Governor, State of Colorado 135 State Capitol Denver, Colorado VIA Electronic Mail: Re: Request the Veto of CO SB 198: Contractual Agreements with Health Care Providers 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 Dear Governor Owens; NADP is the largest non-profit trade association representing the dental benefits industry in the United States 1. Some 2.3 million Colorado residents have dental benefits through 32 of our member plans operating both directly and indirectly in Colorado. On May 8, 2006, the Colorado Legislature passed SB 198 mandating specific parameters in our member plans contracts with their providers, namely dentists. On the surface, the Act provides seemingly reasonable guidelines for provider agreements, however, there are adverse consequences in the application of the bill that were unintended and need to be addressed. Compliance with these measures is expensive and will negatively affect Colorado consumers by increasing dental premiums without offsetting benefits. Therefore, we would encourage you to examine the implications of SB 198 fully, and respond appropriately with a veto. KEN KEATING, GBA SafeGuard Dental & Vision Aliso Viego, California Executive Director EVELYN F. IRELAND, CAE National Association of Dental Plans Dallas, Texas Following are several examples of how this bill will negatively impact the dental benefits industry: Section (2)(III)(d): The definition of Material Change means changes the administrative procedures in a way that may 1 NADP s member dental plans provide dental benefits to 111 million of the 160 million Americans with dental benefits, i.e. 70% of the total dental benefits market. Our members include major commercial carriers, regional and single state companies, as well as companies organized as Delta and Blue Cross Blue Shield plans that offer all lines of dental benefits LBJ Freeway Suite 935 Dallas, Texas Fax

2 Governor Owens May 23, 2006 Page 2 of 3 reasonably be expected to significantly increase the provider s administrative expense. This definition is extremely problematic for two reasons. First, unlike medicine, dentists are largely solo practitioners. According to the Bureau of Labor Statistics Occupational Outlook Handbook, 78 percent of dentists in private practice are sole proprietors, and 14 percent belong to a partnership. A few salaried dentists work in hospitals and offices of physicians. Thus, there are many more offices to which this assessment can be applied. Currently, our members do not track each provider s administrative operations and it would be cost prohibitive to do so on a premium that ranges from $14.74 to $37.62 monthly. Applying this measure equally to the dental carriers that operate on less than 1/10 th of the premium of medical carriers is a disproportionate and undue burden. The estimated 3,007 Colorado dentist s vary significantly between paperless offices that send only electronic claims, to providers that do not allow Internet access in their dental offices; a simple form change could have little impact on one provider, and huge cost ramifications for another. An insurer is simply not in a position to make that type of determination on what constitutes significant administrative costs to the dental provider. Section (6)(a-e) allows a 60 day negotiation period between an insurer and their contracted provider if the provider does not want to comply to the insurer s material change. Although on the surface this seems like a reasonable request, material changes usually occur outside of the carrier s control, such as states changing their regulations that affect our members (like this one), or when the clients/employers request the modification. Our members try to avoid making material changes as they are costly to implement. Additional expense and havoc will be created as insurers must now wait the 60 days to see which provider s will continue on their network each time a material change is necessary. Section (7): This section places an enormous restriction on insurers. Our members shall not require as a condition of contracting that a provider provide services under more than one product offered by the insurer. In the dental benefits industry, it is typical and crucial for our plans to be able to offer more than one product choice to their clients, in this case, Colorado businesses and individuals. Separating the contract processes for all products adds time and cost to the process of contracting. Mandating this requirement will reduce freedom of choice for Colorado residents on their dental benefits while increasing their cost. We appreciate the opportunity to provide our comments on SB 198. To reiterate, we understand and appreciate the basic reasoning behind the legislation, but felt the negative consequences of this bill with regard to the disproportionate impact on the dental benefits industry was not understood. It is unfortunate, but by adding just a seemingly small layer of compliance on insurance companies, premiums will most certainly increase in your state for dental benefits. For these reasons, we would urge you to veto SB 198.

3 Governor Owens May 23, 2006 Page 3 of 3 Thank you for your time and attention towards this extremely important matter, and I hope that you find our suggestions insightful and constructive. I have attached the NADP member list for your review, highlighting those companies that operate specifically in Colorado and would be impacted by the passage of SB 198. Please contact me for any questions or concerns you may have. Respectfully, Kris Hathaway Director of Government Relations National Association of Dental Plans

4 Attachment A: NADP Member and Affiliates Bold Indicates Operations in Colorado 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 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. Assn of Utah 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 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. Guarantee Trust Life Guardian Life Insurance Co. of America, Inc Health Care Service Corp Health Resources, Inc.

5 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

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