SPOTLIGHT: Insurance commissioners approve 2010 medical loss ratio form

The National Association of Insurance Commissioners (NAIC) this week overwhelmingly approved a form for medical loss ratio reporting, the NAIC announced in a press release.

You can find the NAIC-approved form, known as a blank, on its website. Health plans will use the blank to report financial information to state regulators for 2010. Those regulators then will review the data to calculate the medical loss ratio and any rebate required under a provision of the Patient Protection and Affordable Care Act.

The rebate won't kick in until 2011, an NAIC spokesman told FierceHealthPayer Wednesday.

Expect the current, standard accepted version of the MLR will change, the spokesman said. "There will be new instructions for 2011 filings," she said. "This blank is just for 2010. It will be amended without a doubt based on how it's ultimately defined."

The reform bill requires insurers to spend at least 85 percent of subscriber premiums on medical costs in the large group market and 80 percent for small group and individual plans, The Hill reports. Insurers that don't meet the MLR requirements must compensate customers by sending them rebates.

The commissioners approved amendments that expand the definition of "wellness and health promotion activities" to include public health marketing campaigns performed in conjunction with state or local health departments, but rejected an amendment that would have let payers count accreditation fees as a quality improvement cost, which would have made it part of medical costs, Politico reports.

After the insurance commissioners' vote, consumer advocates differed with health plan insiders over how medical spending is defined.
Health Care for America Now, a liberal grassroots group that wants regulators to make the minimum MLR definition as narrow as possible, praised the NAIC vote, saying that NAIC took a step toward "ending the health insurance companies' stranglehold on our healthcare," HCAN Executive Director Ethan Rome said.

America's Health Insurance Plans, the trade organization that represents health insurers, criticized NAIC for its narrow definition of what counts as medical care and quality improvements, The Hill reports. AHIP warned of the unintended consequence of "turning back the clock on efforts to improve patient safety, enhance the quality of care, and fight fraud," in a statement released by organization president and CEO Karen Ignagni.

Preventing payers from counting fraud prevention and other investments limits their ability to keep costs down, insurers told The Hill.
Last week, AHIP sent a letter to NAIC urging it to include fraud prevention and detection expenses, utilization review costs, individual policy wellness expenses, and ICD-10 implementation in MLR calculations, Life and Health Insurance News reports. Utilization review costs, all accreditation fees and fraud prevention costs were among expenses excluded from medical costs in the 2010 form.

Many contentious issues surrounding MLR regulation have yet to be resolved, including how federal taxes will be factored into the calculation, Politico reports.

To learn more:
- here's the National Association of Insurance Commissioner' press release on MLR reporting
- read the press release from America's Health Insurance Plans
- here's the Politico story
- read The Hill's story  
- read the Life and Health Insurance News article

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