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Understanding MLR Waiver Requests

Margaret Dick Tocknell, for HealthLeaders Media, July 27, 2011

The process takes months to complete and often involves requests for additional information." The rebate requirement goes into effect on Jan. 1, 2012 for any state that hasn't already been granted a waiver.

For the most part, the basis for requesting a MLR waiver – at least for the states that have applied so far – falls into a single category: fear that meeting the standard will destabilize the individual market and result in fewer choices for consumers.

That's an ongoing concern for HHS, as it develops rules and regs to implement the ACA and the department has let it be known that it is open to granting waivers to states that can make that case.

But as North Dakota has learned, making that case is easier said than done.

In its waiver application, the state contended that an increase from the 55% MLR required by state law to the 80% required by the ACA would pressure insurers to reduce or eliminate broker's commissions. That could lead to a reduction in services by brokers and "cause poor purchasing decisions" which could "cause financial harm to our marketplace."

HHS didn't buy it. Last week it notified the state's insurance commissioner that its waiver request had been turned down flat.

Although market destabilization is an overarching concern, in making its MLR waiver decisions HHS looks at five factors:

  • Whether insurers will leave the market or stop offering insurance
  • How many enrollees will be affected by the departures
  • Will access to brokers/agents be limited
  • What alternative coverage is available
  • How will premiums and benefits be affected
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