Exec Summaru - MLR

Rules on Medical Loss Ratios


Who:             Insurance companies will be required to do the analysis and reporting.  Rebates could apply to any individual covered by an individual insurance plan or enrollee in a fully insured group plan.


 When:         Starting with plan years January 1, 2011.  Medical loss ratios will be calculated using data as of December 31 of the plan year except for incurred claims which shall be restated as of March 31 of the year following the plan year.  Rebates shall be paid annually by June 30 of the year following the plan year.



Summary:  The “Minimum medical loss ratio standard” requires insurance companies to submit a report showing the ratio of claims incurred to premiums earned. The report will include the percentage of total premium revenue spent on reimbursement for clinical services, for activities that improve health care quality; and on all other non-claims expenses.  The Secretary shall make reports available on the Internet website of the Department of Health and Human Services.


Medical loss ratios shall be reported to the applicable state(s) by May 31 of the year following the plan year.  Rebates are determined on a state level.


Issuers are required to provide an annual rebate to each enrollee if the percentage of premium spent on medical care is less than 85% for large groups and 80% for individuals and small groups.


While the concept of minimum loss ratio seems simple, the rules for calculating rebates are complex.  The National Association of Insurance Commissioners has developed a detailed guide for the Secretary with recommendations to determine rebates.



Required:    Most employers not self-insured will want to discuss the new legislation with their

insurer, TPA,  agent,  broker, or benefit consultant.  They may be eligible for a rebate in 2012 and beyond.


The information presented and contained within this article was submitted by Ronald E. Bachman, President & CEO of Healthcare Visions. This information is general information only, and does not, and is not intended to constitute legal advice. You should consult your legal advisors to determine the laws and regulations impacting your business.
Ron Bachman,
Jun 17, 2011, 11:49 AM