The Often-Unmentioned Benefits of Network Leasing
By Mike Adelberg, NADP Executive Director
May 22, 2023
In my six months as Executive Director of NADP, I’ve been pulled into at least a dozen conversations about network leasing in the dental benefits market. Most of these conversations were sparked by confusion over an aspect of this common industry practice. In our complicated world, there are few business practices that never frustrate anyone. (But more on this later).
I wanted this blog to remind people who care about the delivery of dental benefits why so many dental plans are either network leasers or leasees, and why so many dentists sign agreements that authorize leasing.
Leasing dental networks allows dental plans to bring their employer customers and plan members greater provider choice. A plan with a solid network in 35 states might need to lease a network from another plan in order to meet the needs of an employer with employees in all 50 states. A plan that is about take on a large new employer might lease the network of another plan in order to provide added capacity to serve its growing membership.
Network leasing is central to meeting the access needs of consumers.
Network leasing also promotes competition in the dental benefits market. Building out a network is the greatest single rate-limiter for new plans entering a market or existing plans expanding their service areas. New and small plans are especially likely to be dependent on a leased network.
Without network leasing, there would be less competition and less innovation in the dental benefits market.
For providers, participating in a leased network increases the odds of bringing in new patients. Given today’s mobile workforce, dental practices can blunt patient attrition by participating in multiple plan networks and leasing enables this without re-contracting and re-credentialing. As a result, tens of thousands of dental providers have voluntarily signed contracts with terms that permit these agreements to be leased to additional plans.
Legislators who focus on dental plans have long recognized the important role of network leasing—and the need to look out for the interests of consumers and providers. In 2020, at the conclusion of a long, deliberative process, the National Conference of Insurance Legislators (NCOIL) passed a model law that explicitly permits network leasing, subject to guidelines and a number of consumer and provider protections. The model includes:
- transparency requirements,
- notification requirements, and
- provider protections including:
- the right to opt out of a network leased to a third-party
- protection from termination if a provider opts out of third-party leasing
- leased network third party must comply with the terms of original provider agreement.
A few states are considering bills that would impose novel restrictions on network leasing. While dental plans are already heavily regulated, they do not oppose giving regulators the tools necessary to protect consumers. To those who might consider novel restrictions on network leasing, I ask you to ask yourself two simple questions:
- Have you deliberated on network leasing more than NCOIL and, if not, what gives you confidence that your approach is better than the NCOIL model?
- Knowing that network leasing is a common and necessary practice, what have you done to consider the potential unintended consequences that might come from the novel regulation you are considering?
NADP is eager to engage in substantive discussions about network leasing.