Regulators have to figure out how to handle health carriers that offer more than one type of health plan when they implement the new minimum medical loss ratio rules.

The Patient Protection and Affordable Care Act (PPACA), part of the federal Affordable Care Act package, will require the MLR, or percentage of health coverage premium revenue spent on health care and quality improvement efforts, to be at least 80% for individual and small group health coverage and 85% for large group coverage.

If administrative costs are too high, insurers or employer-sponsored health plans are supposed to provide rebates.

The PPACA Actuarial Subgroup of the Accident and Health Working Group, an arm of the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., has been dealing with questions such as the precise definitions of the factors to be used in MLR calculations.

Another issue has been the rules that should govern carriers that offer several different types of plans, such as a conventional health maintenance organization plan, a conventional preferred provider organization (PPO) plan and a high-deductible PPO plan.

Aetna Inc., Hartford (NYSE:AET), has sent the subgroup examples of how regulators might treat combination programs on a single-state basis and a multi-state basis.

In one single-state scenario that Aetna has provided, “MLRs based purely on licensed entity create false MLRs,” according to Christina Nyquist, an Aetna vice president. “Therefore, we propose allowing insurers to prospectively commit (for 3 years) to a defined end-of-year reconciliation process. Under this process, the actual aggregate loss ratio would be used to allocate claims to each licensed entity so that each licensed entity would have an equal loss ratio for the employer group.”

If regulators make carriers report MLRs on a state-by-state basis and by legal entity, carriers may withdraw products from some markets, Nyquist says.

“While states with smaller populations are particularly vulnerable, larger states also may experience pullouts as some national insurers may still have a small footprint due to historical enrollment issues,” Nyquist says.

Aetna believes PPACA gives regulators room to allow national MLR reporting for large groups, Nyquist says.