HHS Releases Revision to Health Reform Law's Medical-Loss Ratio Rule

TOPIC ALERT:

On Friday, HHS released revisions to the final rule for medical-loss ratio requirements under the federal health reform law stipulating that insurers must provide customers with information about how their premium payments are spent, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 12/2).

The MLR rule mandates that private insurers spend at least 80% in the individual market or 85% in the group market of premium dollars on direct medical costs. Insurers that do not comply with the ratio must issue rebates to consumers (California Healthline, 12/2).

The MLR regulation took effect at the beginning of 2011. However, HHS on Friday unveiled details that addressed previously unresolved issues (Reichard, CQ HealthBeat, 12/2).

Details of Revisions

According to the rule, insurers must notify customers about MLR data even if spending levels meet the law's requirements. The rule also states that any rebates must be tax-free ("Healthwatch," The Hill, 12/2).

According to HHS, employers can distribute rebates by reducing workers' premiums for the rest of the year or the following year or by giving them a cash refund. The first rebates must be provided by August 2012 (Radnofsky, Wall Street Journal, 12/2).

The rule also strengthens standards for "mini-med" plans that offer limited coverage, which would subject them to nearly the same MLR requirements as the more comprehensive plans by 2014 ("Healthwatch," The Hill, 12/2). According to a CMS fact sheet, the agency expects that in 2014, "mini-med policies will cease to exist" (CQ HealthBeat, 12/2).

Decision on Brokers' Fees

Meanwhile, HHS did not grant insurance brokers' request to exclude their fees when calculating MLRs.

Brokers had lobbied for officials to avoid counting their fees because they said insurers were limiting brokers' commissions in an effort to reduce administrative expenses (Wall Street Journal, 12/2).

james mcniff
Great article in health affairs regarding MLR by Mr.Fost

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