NAIC weighs in on premium rate increases and medical-loss ratios

Exactly what constitutes a reasonable vs. unreasonable premium rate increase is a question that even the National Association of Insurance Commissioners (NAIC) has trouble answering, reports the Kaiser Health News. In a letter to the U.S. Department of Health and Human Services, the NAIC provided 11 potential methods for defining a "potentially unreasonable" premium increase. The association's decision not to choose a specific percentage to define unreasonable rate increases came after the trade group America's Health Insurance Plans advised NAIC to not adopt an "arbitrary" definition.

The NAIC also submitted a letter to HHS providing insights about current state requirements for medical-loss ratios and how states will be impacted by the health reform law provisions on medical-loss ratios. "We believe current MLRs for most issuers in the small group and large group markets, when calculated with the PPACA adjustments and applied to the entire market within a state, would be higher than the PPACA minimums," notes the association. "To the extent data is disaggregated, there might be particular categories where the standard would not be met. The situation is less clear in the individual market. Some issuers would likely have aggregate MLRs below 80 percent in at least some states even after the adjustments, while others would be well above the minimum."

The NAIC plans to complete its recommendations on the definitions and calculations that should comprise the medical-loss ratio by June 1. Health insurers have been making their case to the NAIC regarding what expenses should be included in the medical-loss ratios, reports the Washington Post. Among the expenses they seek to include: fraud-fighting and overbilling initiatives, utilization review/precertification activities and internal or external reviews of coverage denials.

To learn more:
- read this Kaiser Health News article
- read this NAIC press release
- read the NAIC letter on premium increases
- read the NAIC letter on medical-loss ratios
- read this Washington Post article
- read this New York Times article

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