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.
HHS has a role to play based on the work the NAIC does, and the NAIC needs to issue interim final rules by Nov. 1 to allow the 60-day comment period required before the rule is approved, he pointed out.
At the same time, “carriers and employers plan at least a year in advance of the next plan year,” he said. “This gives them no time to sort out whether they can continue to offer coverage.”
Moreover, “Congress doesn’t seem to be in any hurry to conduct oversight hearings to learn of these problems,” he said.
Employers have been shocked to find that rates for health care insurance are increasing, not falling, as the president promised, the official maintained.
“New benefits, while they may be worthwhile, are not free, and the uncertain regulatory framework means employers have to plan for the worse-case scenario,” the official said.
Meanwhile, fast food company McDonalds, Oak Brook, Ill., voiced deep concern about the implications of the new rules for its own health care benefits.
Today, Sen. John Rockefeller, D-W.Va., chairman of the Senate Commerce Committee, demanded that BCS Financial Corp., which provides the health insurance McDonald’s offers its employees, promptly give his committee information about the product.
Rockefeller said in the letter that the healthcare law requires insurers in the individual and small group markets to pay rebates if they spend less than what is required by PPACA.
“The purpose of this provision is to make sure that most of consumers’ insurance premiums are going to pay for medical care, not insurers’ administrative costs and profits,” Rockefeller said.