Most Insurers Would Have Met MLR Criteria Before Rule Took Effect
UPDATE: After publication on Friday, HHS released the final rule on the medical-loss ratio under the federal health reform law. Under the MLR rule, private insurers are required to spend at least 80% in the individual market or 85% in the group market of their premium dollars on direct medical costs. Insurers that do not comply with the ratio must issue rebates to consumers. According to the Center for Consumer Information and Insurance Oversight at CMS, the final rule leaves these provisions intact and primarily addresses "technical issues involved in the way issuers calculate and report their MLR and the mechanism for distributing rebates to enrollees in group health plans." These changes include adjustments to the rebate process for consumers enrolled in group plans, to carriers of mini-med policies and to carriers of plans offered to residents working abroad. The final rule also allows insurers to claim as a quality improvement activity up to 0.3% ofÂ collected premiumsÂ for work on the conversion to ICD-10 code sets. Stay tuned for more coverage on the final MLR rule in Monday's California Healthline.
At least 64% of U.S. health insurers would have satisfied the medical-loss ratio provision included in the federal health reform law in 2010, before the rule took effect, according to a Government Accountability Office report, Reuters reports (Reuters, 12/1).
Under the MLR rule, private insurers are required to spend at least 80% in the individual market or 85% in the group market of their premium dollars on direct medical costs. Insurers that do not comply with the ratio must issue rebates to consumers.
The reform law allows states to request adjustments if they can prove enacting the new limits would immediately destabilize the state's insurance market (California Healthline, 11/23). HHS has granted MLR waivers to seven states but denied requests from Delaware, Indiana, Louisiana and North Dakota (Pecquet, "Healthwatch," The Hill, 11/28).
According to the report, 77% of insurers in the large group market and 70% of insurers in the small group market would have met or exceeded the MLR requirements.
Meanwhile, GAO found that 43% of insurers offering individual plans would have complied with the provision. GAO noted that insurers in the individual market were less likely to meet the requirements because they had higher expenses for brokers' commissions and fees than other insurers (Reuters, 12/1).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.