Like a battered fighter who keeps coming back for another round, Florida is not giving up on its quest to be granted a waiver from the medical loss ratio requirements required by the Patient Protection and Affordable Care Act.
Florida officials have appealed the Centers for Medicaid & Medicare Services' decision to deny the state's request for a waiver to allow health insurers more time to meet the MLR requirements.
In a December 30, 2011 letter to CMS's Steve Larsen, the Florida insurance commissioner, Kevin McCarty, contends that 'failure to obtain the requested adjustment will cause permanent, irreparable harm to our market and the distribution channel for health products and services.'
The PPACA requires that health insurers spend no more than 15% to 20% of their annual premium dollars for individual policies on administrative expenses beginning in 2011. Health plans that don't meet the MLR standard must provide a rebate to their customers.
In the waiver request filed with CMS in March 2011, Florida officials asked for an adjustment of the MLR standard to 68%, 72%, and 76% for 2011, 2012, and 2013, respectively.
That request was denied in mid-December 2011. At that time Larsen noted that with 20 carriers, Florida has a very competitive individual health insurance market and there was no indication that meeting the MLR requirement would create a hardship for the insurers.
McCarty's letter, which also requests 'further time to augment and amplify' the state's waiver application for reconsideration, refers to the departure of six carriers as proof that 'significant damage to our marketplace has already occurred.' While noting that the six represent a 'relatively small portion of the marketplace,' the letter contends that the departures 'translate into fewer products and less competition' for the individual market.
The letter also cites the effect of the new MLR ratios on the agent and broker workforce. According to an informal survey, agents have already faced reduced commissions, layoffs, and reduced compensations.
CMS has not issued a timeline for reaching a decision on the appeal. It took CMS about two weeks to recently deny Louisiana's appeal request.
Meanwhile, Kansas and Oklahoma officials learned on Wednesday that their waiver requests have been denied. Kansas asked for MLR adjustments of 70%, 73% and 75% for 2011, 2012, and 2013, respectively. Oklahoma wanted its MLR requirement set at 65% in 2011, 70% in 2012 and 75% in 2013.
CMS made similar findings in both appeals, noting that because no issuers are likely to withdraw from the either state's individual market it was unlikely that the MLR requirement would destabilize the market.
The agency also noted that issuers in the Kansas and Oklahoma individual markets either already meet the 80% MLR standard, or are 'adapting their business models in order to continue to achieve sustainable financial performance in that market, as well as to comply with, and benefit from, the provisions of the Affordable Care Act.'
John Doak, the Oklahoma insurance commissioner, released a lengthy statement criticizing the MLR waiver decision, asserting that it could lead to a 'massive disruption' of Oklahoma's insurance market. 'MLR is an arbitrary and superficial means of judging the worth of an insurance company to its policyholders,' Doak said.
'Just because one company is able to attribute a smaller percentage of its operating costs to each policyholder does not necessarily mean its policyholders received a greater value for their dollar.'
According to the release, Doak supports efforts to repeal PPACA. 'We look forward to the coming months as the Supreme Court will hear challenges filed against this law, and I look forward the eventual, total repeal of the Act.'
Still, Oklahoma officials aren't ready to pull the trigger on a definite appeal of the waiver denial. 'Any determination to appeal will be based on a thorough analysis by the Oklahoma Insurance Department of the rationale behind the denial,' Glenn Craven, spokesperson for the department told HealthLeadersMedia in an e-mail exchange. 'We would need to find new evidence or make additional points to bolster our case, not just insist that HHS got it wrong.'
Sandy Praeger, the Kansas insurance commissioner, voiced similar concerns regarding a possible appeal. 'As we've looked at 2011 data, it looks like insurers are making adjustments and getting close to the 80/20 requirement.' In a telephone interview she explained that the state's primary concern is to protect the individual market. 'It's not huge, but everyone [insurers] is important and we don't want anyone to leave.'
Only 17 states and Guam filed MLR waiver requests and CMS has acted on all but three: North Carolina, Texas, and Wisconsin. CMS has granted six waivers: Georgia, Iowa, Kentucky, Maine, New Hampshire, and Nevada.
It denied a waiver for Guam and eight states: Delaware, Florida, Indiana, Kansas, Louisiana, Michigan, Oklahoma, and North Dakota.
See also:
4 States Await Word on MLR Waiver Requests
Understanding MLR Waiver Requests
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
