The Centers for Medicare & Medicaid Services (CMS) is preparing to apply minimum medical loss ratio (MLR) requirements to providers of private Medicare plans.
CMS plans to publish a proposed Medicare MLR rule (CMS-4173-P) in the Federal Register Feb. 22.
CMS, an arm of the U.S. Department of Health and Human Services (HHS), is developing the regulations to implement a federal law that will require Medicare Advantage plans and Medicare Part D prescription drug plans to spend at least 85 percent of their revenue on health care and quality improvement efforts starting in 2014.
Plans that fail to meet the mark will have to make up the difference by sending rebate checks to enrollees.
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If 2014 Medicare plan revenue and benefits totals are similar to what they likely will be this year, then Medicare plans could end up paying about $858 million in rebates, officials estimated. That would amount to an average payment of about $30 to $40 per private Medicare plan enrollee.
CMS officials said they are hoping the draft regulations will lower the cost and improve the quality of private Medicare plans.
Improving MLR reporting should “help ensure that taxpayers, the federal government, and enrolled beneficiaries receive value from Medicare health plans,” CMS officials said in a discussion of the possible effects of the proposed regulations.
In a discussion of possible rebate program costs, officials said the program could cause some Medicare plans to lose money.
“They may respond by changing or reducing the number of products they offer,” officials said.
If organizations limit Medicare plan product offerings, some individuals may need to change plans, officials said.
“For Medicare beneficiaries, this may also lead to reduced choice, the inability to purchase similar coverage, and higher search costs related to finding affordable insurance coverage,” officials said.
Karen Ignagni, president of America’s Health Insurance Plans (AHIP), used the released of a preliminary version of the proposed regulations as a chance to repeat the message that Obama administration and Congress are also imposing new taxes and payment cuts on private Medicare plan providers.