NAIC Approves Proposal Defining Spending Rules for Medical-Loss Ratios
On Tuesday, the National Association of Insurance Commissioners voted unanimously to approve the so-called "blanks" proposal that defines the types of services, fees and other spending that health insurers can count as medical spending under medical-loss ratio rules in the federal health reform law, Politico reports (Kliff, Politico, 8/17).
The law stipulates that beginning Jan. 1, 2011, large group health plans must spend at least 85% of premiums on medical services and quality improvement, rather than on administrative costs or profits. The MLR for individual and small-group health plans must be at least 80% (California Healthline, 8/13).
HHS is expected to use NAIC's "blanks" proposal to implement the MLR rules and reporting requirements (California Healthline, 8/16).
In addition to approving the "blanks" -- the filing form that insurers would use to report financial data to state insurance commissioners -- NAIC adopted 10 of 11 proposed amendments that further narrowed the types of expenses and fees that insurers would be allowed to count toward MLR calculations.
The rejected amendment would have allowed insurers to count accreditation fees as a "quality improvement cost," essentially making it a part of medical spending, according to Politico.
The votes on Tuesday -- the final day of NAIC's annual summer meeting in Seattle -- left some issues unresolved, including how federal taxes would be incorporated into MLR calculations (Politico, 8/17).
Six congressional Democratic leaders last week sent a letter to HHS and NAIC officials seeking to clarify how federal taxes and fees should count toward MLR rules.
The Democrats noted that only federal taxes and fees relating specifically to revenue generated from the insurance coverage provision in the reform law should be counted as medical costs.
A legal opinion obtained by America's Health Insurance Plans last Friday states that the Democrats' letter should not be considered as an explanation of the legislative intent of Congress (California Healthline, 8/16).
AÂ separate NAIC working group is working to develop the MLR methodology with a goal of resolving the federal tax issue by summer's end (Politico, 8/17).
NAIC Actions Draw Insurers' Ire
NAIC's adoption of the tighter filing regulations instantly drew criticism from AHIP officials and insurers, The Hill's "Healthwatch" reports.
The officials said that the group's decision to bar health plans from counting fraud prevention and other investments blocks their efforts to keep costs down, while other filing guidelines could compromise patient care and safety (Pecquet, "Healthwatch," The Hill, 8/17).
In a statement, AHIP President and CEO Karen Ignagni said that although NAIC's work in developing the MLR definitions was "transparent and thorough, ... the current ['blanks'] proposal could have unintended consequences of turning back the clock on efforts to improve patient safety, enhance the quality of care and fight fraud" (Reichard, CQ HealthBeat, 8/17).
Consumer Groups Commend NAIC Proposal
Meanwhile, the liberal consumer grassroots group Health Care for America Now praised NAIC's vote.
In a statement, HCAN Executive Director Ethan Rome said, "Today the NAIC took a step toward ending the health insurance companies' stranglehold on our health care" ("Healthwatch," The Hill, 8/17).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.