HHS Releases Final Medical Loss Ratio Regulations

The Obama administration today issued the final regulations on the much-discussed medical loss ratio — the proportion of premium dollars health insurers spend on patient care, compared to administrative expenses.

The health-care overhaul bill stipulates targets of 80% for small-business plans and 85% for large-company plans, but the industry had lobbied to make it easier in various ways for insurers to hit those benchmarks. (If they don’t, they’ll have to pay rebates to policyholders.)

But there weren’t any surprises, as the regs weren’t changed from those recommended by the National Association of Insurance Commissioners last month. One of the proposed amendments that didn’t make the NAIC’s final recommendations was a proposal to remove insurance-broker commissions from the administrative-cost bucket. But the NAIC said the health-care law made it pretty clear that those costs were intended to be classified as administrative, and so it skipped a vote on the amendment and instead created a subgroup to work with HHS on the issue.

Here are some additional articles on the issue:

HHS Release

Kaiser Health News