Skip to main content

NAIC Approves Medical Loss Ratio Template

 |  By jsimmons@healthleadersmedia.com  
   August 20, 2010

The National Association of Insurance Commissioners' Executive Committee unanimously approved the "blanks" template this week at its annual meeting in Seattle. The template, now available online, provides insight into what can be considered a medical expense under the minimum medical-loss ratio requirements.

The blanks, which are the forms submitted by insurers to state regulators when reporting financial information, will be used by the states in reviewing data and calculating medical-loss ratios. Under the new healthcare reform law, insurers with large group coverage plans are required to spend at least 85% of premiums on medical costs, and at least 80% of premiums for those plans with individual and small group plans starting in 2011. If any of the insurers fall short, they will be required to give customers a rebate for the difference starting in 2012.

The instructions, though, still might change depending on the definition of medical-loss ratio that the NAIC eventually approves this fall and forwards to the Department of Health and Human Services. HHS is responsible for certifying that language.

One major question slowing the deliberation is what is considered quality-related care—with consideration to such areas as nurses' hotlines, disease management programs, or public health education initiatives—and if and how that should be considered medical care under the ratio formula.

It already has caused concern in Congress. Earlier this month, more than four dozen senators and congressmen signed a letter sent to NAIC that asked it to "consider the strictest definition of 'quality improvement expenses' when implementing the mandatory medical-loss ratio standards."

However, America's Health Insurance Plans President and CEO Karen Ignagni said in her letter to NAIC after the vote on the template that "the current proposal could have the unintended consequence of turning-back-the-clock on efforts to improve patient safety, enhance the quality of care, and fight fraud."

In its statement, DMAA: The Care Continuum Alliance, a Washington-based trade group representing wellness and disease management program vendors, said the template "has strongly made the case that such services should be recognized as medical or quality improvement expenses in the medical-loss ratio."

HHS Secretary Kathleen Sebelius, writing in her blog earlier this week, said HHS has recently heard reports that some issuers were making decisions about participation in particular markets—based on the effect of these requirements.

"As we move forward, I urge insurance companies, consumer groups and other stakeholders to continue to participate in the process," she said. "It is premature for insurers to make business decisions about participation in particular markets based on rules that have yet to be published, or to apply for exemptions to rules that have not yet been drafted."

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

Tagged Under:


Get the latest on healthcare leadership in your inbox.