The Michigan Office of Financial and Insurance Regulation is asking for comments about how the new federal medical loss ratio (MLR) rules might affect individual consumers, insurers and agents.
Comments are due 5 p.m. Dec. 10, and they “should be brief, specific, focused on the Michigan health insurance marketplace,” Michigan office officials say in a notice about the MLR request for comments.
The U.S. Department of Health and Human Services (HHS) released the minimum MLR interim final regulations Nov. 22.
The regulations implement provisions in the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA), that will require that 85% of large group premium revenue and 80% of individual and small group premium revenue go to medical care and quality improvement efforts. Starting in 2012, plans that miss the mark are supposed to send customers rebates.
The PPACA rules will let HHS officials adjust the minimum MLR percentage with “respect to a State if [HHS] determines that the application of such 80 percent may destabilize the individual market in such State,” Michigan officials note.
Only a state insurance regulator can ask HHS for an MLR adjustment, and a state regulator who is asking for an adjustment must provide data supporting the request and a proposal for an alternative ratio, officials say.
“Only the 80% ratio may be adjusted and only when the 80% ratio
‘may destabilize the individual market’ in the state requesting the exemption,” officials say. “The exemption is not a waiver of all loss ratios.”
The adjustments will be granted on a state-wide basis, and not to individual insurers, officials say.
Interested parties already have been asking about MLR adjustments, and Michigan Insurance Commissioner Ken Ross says he has decided it would be helpful to give all parties with an interest in this question a chance to share their views.
Ross notes that HHS officials say they will use 6 criteria to determine the risk of destabilization, and he is asking commenters to try to tie their comments to the 6 criteria.
The criteria are:
1. The number of issuers reasonably likely to exit a state or to cease offering coverage in the state absent and the possible effects on competition in the state.
2. The number of individual market enrollees covered by issuers that are reasonably likely to leave the state if the 80% MLR requirement is not adjusted.
3. Whether a failure to adjust the MLR requirement would cut off consumer access to agents and brokers.
4. The alternate coverage options within the state available to individual market enrollees if an issuer leaves the market.
5. The effects of the MLR requirements on individual premiums and cost-sharing for consumers doing business with the insurers that will stay in the state after the requirements take effect.
6. Any other relevant information submitted by the sate’s insurance commissioner, superintendent or comparable official.
“In light of the foregoing, should Michigan request a transitional MLR waiver?” Michigan officials ask in their request for comments. “If so, what should the MLR be for the transitional period?”