WASHINGTON BUREAU — State insurance regulators say they are hurrying to set uniform medical loss ratio rules but cannot meet federal regulators’ original June 1 deadline.
Jane Cline, president of the National Association of Insurance Commissioners, Kansas City, Mo., and West Virginia insurance commissioner, and Therese Vaughan, the NAIC’s chief executive officer, have notified U.S. Health and Human Services Secretary Kathleen Sebelius of the delay in a letter.
The new Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, will impose minimum medical loss ratio requirements on U.S. insurers starting Dec. 31, 2010.
The ACA medical loss ratio provision requires the NAIC to establish uniform MLR definitions and standardized methodologies for calculating medical loss ratios. HHS officials then must certify the rules.
Officials at the U.S. Department of Health Human Services want to have rules in place early, so that insurers can start implementing the rules in 2011. Sebelius, a former Kansas insurance commissioner and a former NAIC president, asked the NAIC to complete the MLR work by June 1, to speed up the implementation process.
To ensure that all views are considered, and that all parties have time to review the proposals under consideration, the NAIC is “using a very transparent, but time consuming, process” to craft the rules, Cline and Vaughan write in their letter to Sebelius.
“We certainly appreciate the need to complete this project as soon as possible – waiting until the deadline of December 31, 2010 in the law is not an option – but we also appreciate, as you do, how critically important it is to do this right,” Cline and Vaughan write.
The minimum MLR requirement has “the potential to destabilize the marketplace and significantly limit consumer choices if the definitions and calculations are too restrictive,” Cline and Vaughan warn.
“The medical loss ratio and rebate program could be rendered useless if the definitions and calculations are too broad,” the NAIC officials add. “Only through an open, deliberative process can we hope to reach a reasonable consensus that meets the dual objectives of protecting consumers and preserving competitive markets.”
The National Association of Health Underwriters, Arlington, Va., is welcoming the NAIC’s decision to take more time to consider the MLR issue.
“The NAIC is keenly aware of the need to allow insurance carriers to provide an array of services that will improve the health of Americans and provide them the health care they deserve, effectively and efficiently,” NAHU Chief Executive Janet Trautwein and Peter Stein, NAHU’s vice president of congressional affairs, write in a comment on the NAIC letter. “This is not simply about paying claims, but also providing and preserving services and systems that help keep Americans healthy and help keep their insurance affordable.”