NAIC misses deadline on medical-loss ratio definition
NEWS IN BRIEF — Posted June 14, 2010
The National Assn. of Insurance Commissioners has missed its deadline for a report on how health plans should calculate medical-loss ratios, the industry term for the ratio of premium dollars spent on patient care.
In a letter submitted to the Health and Human Services Dept., the NAIC said it had heard from many interested parties about the definition, and that without more time to consider the comments, the organization could end up making decisions that could cause big problems later (link).
"The medical-loss ratio and rebate program ... have the potential to destabilize the marketplace and significantly limit consumer choices if the definitions and calculations are too restrictive," read the letter from Jane L. Cline, NAIC president and West Virginia insurance commissioner, and Therese M. Vaughn, PhD, the NAIC's chief executive officer.
In a separate statement, the NAIC said it expects to complete its work later this summer. HHS had asked NAIC to give guidance on how to define what counts toward insurers' medical-loss ratio.
Recent health system reform legislation requires a minimum medical-loss ratio of 80% of revenues for individual and small-group policies and 85% for large-group coverage. If plans fall below any threshold, they must refund premium dollars. The mandate is set to go into effect Jan. 1, 2011.
Note: This item originally appeared at http://www.ama-assn.org/amednews/2010/06/14/bibf0614.htm.