dental membership plan compliance: myths vs. facts

Each state has its own rules and regulations concerning dental membership plans. Although these rules and regs can seem a bit daunting to those unfamiliar with membership plan compliance, they are for the dual protection of the patient and the dental practice.

Currently, there is a growing trend amongst dental practices to offer membership plans that patients can enroll in at a much lower cost than traditional dental insurance (and also of much more value).

Yes, there is tremendous opportunity for dental practices to provide a “membership experience” to their patients, but the compliance issues surrounding dental membership plans are too often ignored. This is especially true for solo and small group practices (under 10 locations) who may not have the legal resources that larger groups have.

Some dental practices simply are not aware of these long-standing dental membership plan compliance matters, and others have been fed a false narrative by vendor companies that have recently entered the growing market (we won’t name any names).

A number of these dental practices have been led to believe that if their practice(s) offer discounts in exchange for a membership fee they are are not violating compliance rules and regulations. Simply put, this is not true.

While self-pay patients are often afforded small discounts for care, the line is crossed when a dental practice starts charging a monetary membership fee to patients receiving discounts on dental treatment and services. 

Once fees are charged in exchange for member discounts, this falls under the category of a Discount Medical Plan Organization compliance (“DMPO”) in the eyes of state regulators. Dental membership plans are regulated typically by a state office of insurance, or OIR, and they have requirements that must be followed to be compliant. If violated, it can result in hefty fines and more.

According to the National Association of Insurance Commissioners (NAIC) dental membership plans are not exempt. A Model Act was created in 2007, and today twenty-three states require a DMPO license while thirty-five states in total have some form of regulations in place that apply to dental membership plans. Attaining and maintaining a license in these states varies in difficulty, with states like California, Florida, and Illinois being the most difficult.

Violations of these rules and regulations put dental professionals and their practices at risk. Failure to comply can lead to administrative actions by the state, civil and criminal penalties, and punitive damages toward the dental practice and/or dental service organization (“DSO”).

Partnering with a licensed and reputable DMPO like membersy for your membership tech, marketing, and administration needs eases the burden of compliance responsibilities from your practices and/or DSO.

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