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PPACA: Panel Looks Harder at Medical Cost Definition

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Commenters are asking where provider capitation payments and travel medical insurance will fit in when states are enforcing new medical loss ratio standards.

An actuarial subgroup at the National Association of Insurance Commissioners, Kansas City, Mo., has been considering proposals for fine-tuning efforts to come up with a definition for “medical expense.”

State regulators need a definition to implement a provision of the Affordable Care Act – the federal legislative package that includes the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act – that will set minimum medical loss ratio requirements.

The provision will require insurers to spend 85% of large group premiums and 80% of individual and small group premiums and medical care and quality improvement activities.

A capitation payment is a payment that a health plan makes to a physician, hospital or other health care provider on a “per patient” basis, rather than paying the provider separately for each service rendered.

The actuarial subgroup says it is thinking about letting plans treat all capitation payments as clinical services payments, but it adds that it will ask regulators to keep an eye out for any potential abuses.

The subgroup also is looking at the idea of providing special treatment for consumers covered by expatriate or international policies that cover them while they are traveling or working outside the United States.

The ACA minimum loss ratio provisions probably do not apply to short-term travel medical policies, the subgroup says.

Long-term travel medical policies probably are affected by the rules and possibly ought to be be excluded, but the NAIC does not appear to have the authority exclude them, the subgroup says.

The subgroup says the U.S. Department of Health and Human Services might have the discretion to exclude international medical plans from the new loss ratio requirements.


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