The Centers for Medicare & Medicaid Services (CMS) has released the final version of regulations that will affect how insurers manage and price private Medicare plans.
The final rule, Medical Loss Ratio Requirements for the Medicare Advantage and the Medicare Prescription Drug Benefit Programs (CMS-4173-F), explains how CMS wants insurers to apply new minimum medical loss ratio (MLR) rules to Medicare Advantage plans and Medicare Part D drug plans.
The regulations are set to appear in the Federal Register Thursday.
PPACA and her sister, HCERA
The Affordable Care Act package has two parts: The well-known Patient Protection and Affordable Care Act of 2010 (PPACA), and another, less publicized act, the Health Care and Education Reconciliation Act of 2010 (HCERA).
A new law created by HCERA — Section 1857(e) of the Social Security Act (SSA) — requires 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.
A Medicare plan that misses the minimum MLR goal is supposed to send rebates to enrollees. Officials at CMS — an arm of the U.S. Department of Health and Human Services (HHS) — are estimating that insurers could end up paying about $858 million in rebates, or $30 to $40 per private plan enrollee, if 2014 revenue and benefit totals are comparable to 2013 revenue and benefit totals.
CMS posted a draft version of the Medicare MLR regulations in February and received 51 comments.
Much of the debate about the commercial plan minimum MLR regulations focused on what a plan should and should not be able to count when calculating the amount it has spent on health care and on “quality improvement activities” (QIAs).
Health plans have argued, for example, that the quality improvement activity total should include the cost of efforts to control soaring health care costs by fighting fraud. Some have argued that many of the costs involved with managing a provider network, such as verifying the credentials of providers, also have a direct bearing on quality.