Monday, November 22, 2010

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

Tuesday, November 16, 2010

Grandfathered Health Plans Can Change Insurers

WASHINGTON—Employers are allowed to change insurers without their health care plans automatically losing grandfathered status under the health care reform law, federal regulators said Monday.

In a reversal of their previous position, the Departments of Labor, Treasury and Health and Human Services said forcing an employer to stay with an insurer to keep a health plan’s grandfathered status would give that insurer an unfair advantage.

“If an employer has to stay with the same insurance company to keep the benefits of having a grandfathered plan, the insurance company has undue and unfair leverage in negotiating the price of coverage renewals,” according to an HHS fact sheet.

In addition, “allowing employers to shop around can help keep costs down while ensuring individuals can keep the coverage they have,” HHS said.

Like the original rule, self-funded employers also will be able to change plan administrators without losing grandfathered status for their plans.

Grandfathered plans are shielded from certain health care reform law requirements, such as providing full coverage of preventive services.

The agencies noted that they received many comments on the initial rule that would have stripped grandfathered status for plans that changed insurers. The change in position was in response to those comments, HHS said.

Monday’s action came after federal regulators signaled in September that they intended to modify the original rule

To view the full article click here