TX Strikes Out on MLR Waiver Request

Margaret Dick Tocknell, January 30, 2012

The Centers for Medicare & Medicaid Services denied on Friday a request from the Texas Department of Insurance to allow health insurers in the state more time to meet new MLR standards. CMS rejected what has become a standard argument among waiver applicants, that the 80% medical loss ratio requirement would destabilize the state's individual market and cause insurers to withdraw.

In the waiver request filed with CMS in July 2011, Texas officials asked for an adjustment of the MLR standard to 71%, 74%, and 77% for the reporting years 2011, 2012, and 2013, respectively. At issue is a requirement in the Patient Protection and Affordable Care Act that health insurers spend no more than 15 cents to 20 cents of every premium dollar collected on administrative expenses.

Health insurers that don't meet the MLR requirement will have to pay a rebate to their members. CMS estimates that up to $158.8 million in rebates could be payable to Texas health insurance customers.

Gary Cohen, acting director of oversight at the CMS Center for Consumer Information and Insurance Oversight, noted in a press conference that with 34 carriers Texas has a "robust individual market and there is no indication that insurers will leave". He added that most insurers have "are adjusting their business models to meet the 80% requirement." Others, he said, are "sufficiently profitable" that paying the rebate "will not be a hardship."

Margaret Dick Tocknell Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.


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