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October 01, 2010 at 08:00 PM
WASHINGTON–The Department of Health and Human Services has issued a statement that it will allow great flexibility to employers in applying medical loss ratio (MLR) standards to certain health plans under the health care reform law.
The issue is a major concern to health insurance agents and brokers, especially as they affect mini-med plans, which provide limited healthcare benefits to certain employees, such as part-time workers employed by large corporations.
The law’s MLR provisions will require 85% of large group premiums and 80% of individual and small group coverage premiums to be spent on medical care and quality improvement activities. Carriers and plans that spend too little are supposed to pay rebates.
Although the National Association of Insurance Commissioners (NAIC) is close to completing its work on MLR standards, some employers must soon make decisions about coverage options for 2011, Jay Angoff, director of consumer information and insurance oversight for the Department of Health and Human Services (HHS), said.
“We fully intend to exercise our discretion under the new law to address the special circumstances of mini-med plans in the medical loss ratio calculations,” Angoff stated. The Affordable Care Act, the federal legislative package that includes the Patient Protection and Affordable Care Act (PPACA), mandates that MLR methods be designed to take into account the special situations of smaller plans, newer plans and different kinds of plans in general, Angoff said.
Mini-med plans are often characterized by lower premiums and relatively high patient copayment requirements, he noted.
“We intend to address these and other special circumstances in forthcoming regulations,” Angoff said.
Officials of an insurance trade group that asked not to be identified said the statement was issued because the timelines for implementation of the new rules for MLR “are either unrealistic or too tight for carriers and employers to carry out.”
Moreover, the rules at this time are unknown, the official said.
“Technically, the NAIC is not required by statute to complete their work until Dec. 31, but the requirements go into effect Jan. 1, 2011,” he noted.
