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MLR Waiver Bill Would Shift Power to States

Margaret Dick Tocknell, for HealthLeaders Media, September 20, 2012

A key waiver provision of the Patient Protection and Affordable Care Act would be amended under a medical loss ratio (MLR) bill scheduled for mark-up Thursday before the House Energy and Commerce Committee.

That provision of HR 1206 would give states the final say on MLR waiver requests. MLR waiver authority now rests with the Centers for Medicare & Medicaid Services.

The ACA requires insurers to spend no more than 20% of premium payments collected for the individual and small group market on administrative expenses such as salaries, overhead, and markets. The remainder, up to 80% of premium dollars, must be spent on direct patient care and efforts to improve care quality.

Insurers that fail to meet that standard are required to make financial rebates to their members.

This year insurers rebated $1.1 billion to 12.8 million members.

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3 comments on "MLR Waiver Bill Would Shift Power to States"


E. Thomas (9/20/2012 at 11:53 AM)
Two points. First, if broker and agent fees and commissions are not included as administrative expenses (the 20% bucket), surely they cannot be considerd to be related to direct patient care and/or improving the quality of care (the 80% bucket). Second, if future legislation allows the sale of health insurance across state lines, then moving the MLR waiver decision to the state level could lead to insurers basing operations in MLR friendly states.

krockholt (9/20/2012 at 11:24 AM)
Makes a lot of sense to shift power back to the states, especially with such an unpopular act. I anticipate Romney winning the election and repealing anyway.

Donald R. First (9/20/2012 at 10:22 AM)
I haven't read the bill as it stands now, but I read an earlier version. Th e ability to give States the right to change the MLR is really silly and counter Productive. When did paying commissions to broker become a state Mandate. Take a dood solid look at the texas filing last year and you will see thay had no idea what plans were being marketed or what was realistic. The MLR calculation has plenty of fat. I would advise soe tweeks. I don't think groups of 250 or more should be limited by the MLR and I would excuse them, and I would use a lower MLR on HDHP plans.