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.

Charging a consumer a fee for access to free or discounted health care services is the defining characteristic of a discount medical plan (DMP). In most states that regulate discount plans, a dental membership plan built on that fee-for-discount model is treated as a DMP — whatever it’s called. How a given plan is classified depends on how it’s structured and the state where it operates, so the name alone doesn’t decide your obligations.

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.

There’s a common belief that a practice offering a membership plan to its own patients is automatically outside the scope of discount plan regulation. In many states, that’s not a safe assumption.

A number of states do include a provider exception in their DMPO statutes for discounts a provider gives its own patients. But these exceptions vary, and relying on one is riskier than it looks. Some are expressly limited to discounts offered without a fee to the patient. Others — such as South Carolina and Florida — are written more broadly, exempting a provider who “provides discounts to his or her own patients” with no explicit fee condition in the text.

The unsettled question is whether a broadly worded exception like that actually reaches a structured, paid membership plan, or only informal courtesy discounts. That line is drawn differently from state to state and is exactly the kind of gray area a regulator can read narrowly. A practice that assumes it’s exempt simply because it runs its own plan — without confirming how its specific structure is treated in each state where it enrolls patients — is taking on real regulatory risk.

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.

Whether the software vendor or the practice carries compliance responsibility depends on how the plan is structured, who operates it, and the states where it’s offered — not simply on whether software is involved. Some platforms provide the software but disclaim responsibility for regulatory compliance in their terms of use, leaving that obligation with the practice; others take on more of it directly. Before signing with any partner, read the terms of use and disclosures closely and get a clear, written answer to one question: who is responsible for keeping this plan compliant, and in which states? If that responsibility falls to you, make sure you understand what it involves.

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].