Health Insurers Win Some, Lose Some with MLR Rules

Jeff Elliott, for HealthLeaders Media, November 3, 2010

The general public won't experience the full effect of healthcare reform for some time. But health insurers, arguably the group with the most at stake, are in the thick of what is turning out to be a lively battle with the Department of Health and Human Services over the law's finer points, which continue to evolve.

The latest conflict is over how Medical Loss Ratios (MLR), or the amount of premiums the government has directed health plans to spend directly on patient care, will be calculated. The Affordable Care Act mandates that insurers devote 80 to 85 percent of premiums to medical expenses. If the minimum MLR is not met, plans must offer rebates to policyholders.

Currently at issue is what constitutes a medical expense. If it were up to insurers, little would be off the table. This is why HHS is carefully mulling the specifics so as not to give too much leeway to insurers, but also not to crush them under a regulatory boot.

In late October, the National Association of Insurance Commissioners sent model regulations to HHS, which will use the NAIC recommendations as a basis for writing the official rules. "These recommendations are reasonable, achievable for insurers, and will help to ensure insurance premiums are, for the most part, supporting health benefits for consumers," read a statement from HHS Secretary Kathleen Sebelius.

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