HHS denies Texas' request for insurer spending waiver

HHS' Center for Consumer Information and Insurance Oversight on Jan. 27 denied Texas' request to phase in the health system reform law's limits on health plan administrative spending.

The law's medical-loss ratio provision, which started applying to health plan spending in 2011, requires most health insurers to spend 80% to 85% of premiums on clinical services or quality improvement. Insurers that do not meet the minimums must provide rebates to enrollees beginning in August 2012.

Texas asked for a minimum spending standard of 71% for 2011, 74% in 2012 and 77% in 2013, citing concerns that many health insurers would discontinue individual market policies in the state if they were not allowed more time to adjust their business practices. CCIIO concluded that many health plans in the state already come close to meeting the 80% spending threshold.

The Texas Dept. of Insurance, which had submitted the request, disagreed with the decision in a Jan. 27 statement. A majority of the 34 health plans in Texas subject to the spending provision will be required to provide rebates this year, according to 2010 data. More than 700,000 Texans have individual market coverage, according to the insurance department.

CCIIO has denied requests by eight other states and Guam to implement the medical-loss ratio requirements more slowly: Delaware, Florida, Indiana, Kansas, Louisiana, Michigan, North Dakota and Oklahoma. The office approved waiver requests from Georgia, Iowa, Kentucky, Maine, Nevada and New Hampshire. Requests by North Carolina and Wisconsin had not been decided at this article's deadline.

More information about federal medical-loss ratio determinations is available online (link).

Note: This item originally appeared at http://www.ama-assn.org/amednews/2012/02/06/gvbf0206.htm.