National Insurers Group Releases Draft Rules on Health Care Spending
On Thursday, the National Association of Insurance Commissioners released a draft proposal of the final medical-loss ratio rules under the federal health reform law that would determine spending parameters for health insurers, CQ HealthBeat reports (CQ HealthBeat, 9/23).
Under the overhaul, large health plans beginning on Jan. 1, 2011, will be required to spend at least 85% of premiums on medical services and quality improvement, rather than on administrative costs or profits. Individual and small-group health plans' MLR must be at least 80%.
The law would require insurers to pay a rebate to customers if their MLRs fall below the new limits (California Healthline, 9/23).
The NAIC proposal reiterated that health care expenses intended for health quality "must be directed toward individual enrollees" and that they "should not be designed primarily to control or contain cost" (Heavey, Reuters, 9/23).
The rules would allow insurers to include spending on wellness programs and health care hotlines as expenses, but only if they focus on improving the quality of care (AP/San Francisco Chronicle, 9/23). Insurers also would be allowed to exclude nearly all federal and state taxes from their MLR calculations, with the exception of federal income taxes on investment income and capital gains (Reuters, 9/23).
The types of taxes and fees that insurers can consider as medical spending became an issue over the summer after Democratic leaders sent a letter to HHS -- which will finalize and implement the MLR rules -- narrowing the list of taxes and fees they want permitted for MLR calculations.
Kansas Insurance Commissioner Sandy Praeger -- chair of the NAIC health reform work group that developed the MLR rules -- said, "If HHS wants to take a more narrow view, they'll have to do it," adding, "We recognize this is still an open issue."
The proposed guidelines also would require insurers to account for MLRs separately at each individual business unit in every state, the Wall Street Journal reports.
Insurers had hoped that the rules would allow insurers to submit an aggregated MLR for all of a company's business units. The decision is "a blow to the [insurance] industry" because MLRs can vary significantly, even within the same company, the Journal reports (Johnson, Wall Street Journal, 9/24).
NAIC currently is accepting public comments on the draft through Oct. 4 (Haberkorn/Kliff, "Pulse," Politico, 9/24). The organization plans to finalize them at a meeting in Florida on Oct. 21, before submitting them to HHS for final approval and implementation (Wall Street Journal, 9/24).
Draft Does Not Address Phase-In Proposal
NAIC's draft proposal did not address the request by some NAIC members for gradual enactment of the MLR rules ("Pulse," Politico, 9/24). On Wednesday, several state insurance commissioners made the request during a White House meeting with the Obama administration on the rules, noting that a phased-in approach could prevent potential disruptions in their states' insurance markets.
During the meeting, officials from Iowa and Maine requested waivers to gradually phase in the MLR rules through 2014, while officials from Florida said they were in the process of gathering more information to make a similar request (California Healthline, 9/23).
Praeger said the NAIC work group's proposals were restricted by the health law. She said that although the officials offered a good case for a phased-in approach, the overhaul requires the MLR rules to be implemented next year (Wall Street Journal, 9/24).
NAIC likely will defer to HHS on the issue ("Pulse," Politico, 9/24).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.