Health insurers raised little more than an eyebrow at the new medical loss ratio (MLR) regulations recently issued by the Department of Health and Human Services (HHS). The regulatory body largely formalized the recommendations put forth by the National Association of Insurance Commissioners (NAIC) in October, as directed by the ACA.
That didn't stop industry lobbyists from politely telling the government what's wrong—and always has been—with the rules. To review, health insurers are required to apply between 80% and 85% of premiums directly to patient care or quality improvement initiatives. Those that don't' comply—and this will be closely watched, you can bet—will be forced to provide rebates to their customers. The rules dictate how insurers are to calculate MLR, including what constitutes a patient care versus an administrative expense.
In a statement issued by Karen Ignagni, president and CEO of America's Health Insurance Plans (AHIP), the organization commended HHS for taking into account potential disruption in markets with very few individual insurance players, while reiterating its displeasure with what HHS determined as falling outside the realm of a medical expense.
"More consideration needs to be given to the cost of federally mandated investments in modernizing claims coding and the value of health plans' programs to prevent fraud," she said.
In addition to claims processing technologies and costs associated with fraud prevention activities, AHIP says the money insurers are dedicating to adjudicate claims under the new ICD-10 coding standard should be included as patient care expenses.
If health insurers had gotten their way, we might have an industry largely unaffected by MLR. But that's not the case, and health insurers are girding for change—at least in some markets and service lines such as individual insurance. As noted by HHS, MLR rules could cause major turmoil among individual carriers who work with brokers to provide coverage to some 4 million consumers nationally.