The Medical Loss Ratio (MLR) Report—Just Fiddling While Rome is Burning

Robert Laszewski

Posted 4/26/12 on Health Care Policy and Marketplace Review

Today’s headline was, “Millions Expected To Receive Insurance Rebates Totaling $1.3 Billion.”

The Kaiser Family Foundation estimates that 3.4 million people in the individual market will receive $426 million in consumer rebates because of the Affordable Care Act’s new MLR rules. In the small group market 4.9 million enrollees will see $377 million in rebates, and 7.5 million people will get $540 million in the large group market.

Wow!

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Implementing Health Care Reform: Fine Tuning the Medical Loss Ratio Rules

Timothy Jost

Posted 12/02/11 on The Health Affairs Blog

On December 2, 2011, the Department of Health and Human Services released both a final rule and an interim final rule updating the medical loss ratio rule that it issued almost exactly a year ago. The Department of Labor simultaneously issued a technical release giving direction to employer-sponsored health plans governed by the Employee Retirement Income Security Act (ERISA) as to how to handle rebates provided by insurers who fail to meet the targets established under the MLR rule.

The MLR rule has been one of the most controversial provisions of the Affordable Care Act (ACA). The MLR provision of the Affordable Care Act (section 2718 of the Public Health Services Act) requires health insurers in the individual and small group market to spend 80 percent of their premiums, after subtracting taxes and regulatory fees (85 percent for large groups), on payment for medical services or on activities that improve health care quality. Insurers must report their medical loss ratios annually and insurers that fall short of the target must rebate to their enrollees an amount equal to the product of the difference between their actual medical ratio and the statutory target multiplied by their premium revenues. According to a recent Kaiser tracking poll, 60 percent of the public views the MLR concept favorably, although only 38 percent was aware that the provision is in the ACA.

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For the NAIC, A Consequential Decision on the MLR

Stephen Finan, Barbara Rea, Kimberly Calder, Timothy Jost, Bonnie Burns, Lynn Quincy and Elizabeth Abbott.

First published 5/09/11 on Kaiser Health News

The National Association of Insurance Commissioners is considering whether to endorse legislation that would remove broker and agent commissions from the medical loss ratio, a calculation that could give consumers valuable insights about the proportion of their premiums spent on health care costs compared with administrative expenses and salaries. Removal would have far-reaching implications for the reliability of the MLR as a measure of a health plan’s value, for the broader goal of improving quality and controlling costs, and for the NAIC itself.

Last year, the NAIC recommended that the Department of Health and Human Services adhere to the law’s requirement that brokers’ and agents’ fees be included in the MLR. That position resulted from a thorough process that included input from interested groups representing consumers, insurers, brokers and agents, and others. The recommendation represented an equitable balancing of numerous perspectives, and HHS adopted it virtually unaltered.

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Maine Waiver Expected To Increase Insurer Pressures on States

Roger Collier

First Published 3/14/11 on Health Care Reform Update

HHS’s bellwether decision of last week to grant the State of Maine a three-year waiver from the medical loss ratio provision of the ACA may lead to new efforts by insurers across the country to persuade states to demand similar waivers.

The HHS decision on Maine was not unexpected. The ACA language clearly allows for waivers when imposition of the MLR 80/85 percent threshold penalties would lead to disruption of a state’s insurance market. Maine, a state with very few major employers, has a higher than average percentage of small group and individual policies which typically provide higher out-of-pocket costs—and consequently higher administrative percentages. HealthMarkets, one of the two dominant insurers in Maine, had threatened to abandon the state’s individual market unless a waiver was granted. (According to a Bloomberg report, HealthMarkets, which is majority-owned by two large investor funds, was recently sued by the City of Los Angeles for selling policies with provisions that allegedly effectively eliminated needed coverage.)

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One Minute Left in the Game. Score: Patient Education 100, Patient Accountability 0

WENDY LYNCH

Originally published 10/05/10 at the Health and Human Capital Foundation Blog.

There is a sad irony in new healthcare reform provisions released last week. It rewards (or at least relieves financial pressure on) health plans for virtually every bit of educating, assessing, coaching and reminding it does with patients. Then, it penalizes them for trying to give consumers purchasing power.