Medical-loss ratio could include fraud prevention

Rep. Marsha Blackburn (R-Tenn.) wants insurers' fraud prevention efforts, such as investments in technology, to count as quality improvements for calculating the medical-loss ratio (MLR) that health plans must meet to avoid paying rebates to customers.

In a letter to HHS Secretary Kathleen Sebelius, Blackburn said the change would improve insurance companies' bottom lines by giving them a more favorable MLR and making rebates less likely. Fraud prevention was not included as a legitimate quality improvement under the MLR regulations adopted last month by the National Association of Insurance Commissioners, which HHS is expected to certify any day now, according to The Hill’s Healthwatch.

"To not include fraud prevention costs in the MLR calculation would not only be inconsistent with Congressional intent but would represent a missed opportunity to generate significant system savings--savings that are far greater than those delivered under traditional 'pay-and-chase' methods," Blackburn said.

She added that the recommended MLR rule already lets money spent to recover funds from fraudulent claims be included in the calculation of money spent on quality improvements. Blackburn argued that technology adjustments to prevent fraud should be included as well, reports CQ HealthBeat.

"I urge you to use your discretion in the forthcoming regulation to ensure that the costs associated with the prevention of fraudulent claims--such as those made through key investments in technology--are similarly included as a legitimate 'Quality Improvement' expense," Blackburn wrote.

To learn more:
- read the CQ HealthBeat story
- read The Hill’s Healthwatch article

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