Focus on Health System Reform: Medical Loss Ratio, pt. 2

As detailed in a previous Focus article, the Patient Protection and Affordable Care Act (PPACA) charges the National Association of Insurance Commissioners (NAIC) with the initial development of rules for the Medical Loss Ratio (MLR) by December 31, 2010. Late last week, and as reported in the NCMS Bulletin, October 22, 2010, the NAIC officially adopted its model regulation for submission to the U.S. Secretary of Health and Human Services Kathleen Sibelius. With the NAIC’s recommendations now complete, it will now be up to the Secretary to decide whether she will promulgate the model regulation as is, or make changes.

A huge question of importance is what expenses may a health plan count towards quality improvement, since health plans can count “quality improvement expenses” within the 85% or 80% part of the ratio.  The NAIC describes that term as “all plan activities that are designed to improve health care quality and increase the likelihood of desired health outcomes in ways that are capable of being objectively measured and of producing verifiable results and achievements.”  The expenses must be directed toward individual enrollees and should be grounded in evidence-based medicine.  Some broad categories of those expenses include:

  • Costs for improving health outcomes
  • Improving patient safety and reducing medical errors
  • Hospital readmission prevention activities
  • Wellness & health promotion activities
  • HIT expenses for health care quality improvements

More specific examples within each of these categories can be reviewed in the model regulation.  For physicians, the items that do not count as quality are as important as those that do.  The NAIC listed some examples of expenses that would not count as quality improvement:

  • Retrospective and concurrent utilization review
  • Fraud prevention activities
  • Developing and executing provider contracts and maintaining a provider network
  • Provider credentialing

The model regulation also details how a health plan must calculate rebate amounts due to their members if the health plan fails to achieve the prescribed MLR.

The NCMS will continue to monitor actions at the federal level concerning the medical loss ratio as it moves toward final adoption.


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1 Comment

  • Stephen Ruehle, M.D.

    The ACA requiring insurers to annually report medical loss ratios raises concerns about the types of expenses to be considered legitimate in the loss ratio expense category. A recent North Carolina Medical Society Bulletin indicated the NAIC is developing recommendations for implementation of these medical-loss ratio provisions.
    Worthless excesses of most commercial insurance health management programs while sounding worthwhile, are nothing more than a usurpation and duplication of services provided by physicians and real healthcare providers and most certainly will be used as a tool to manipulate the expense reporting standards brought about by the ACA.
    Third party payers waste huge numbers of healthcare dollars and intrude upon the patient-physician relationship with “augmentation of physician treatment programs” and “establishing a plans of care” while offering “collaboration and co-ordination of care” by (supposedly, according to United Healthcare):

    · Addressing medication compliance and other med-related issues
    · Providing adequate education related to his or her diagnosis
    · Explaining the importance of lab results and indications
    · Setting goals, supporting and working towards a healthful lifestyle
    · Evaluating support systems and overall mental health and well-being
    · Complimenting the treatment plan
    · Reinforcing instructions
    · Establishing a plan of care, specific to the patient’s needs
    · Screening for depression and monitoring symptoms
    · Encouraging physical fitness and gym memberships
    · Enhancement of the physician’s ability to provide evidence-based care for chronic illness
    · Providing information so physicians can stay well-informed about patients
    · Maintaining a comprehensive view of patient’s care
    · Identifying opportunities for better patient care
    · Referring patients to NC HealthSmart for additional support and education
    · Providing our peer’s prescribing statistics for comparative reference.
    · Etcetera, Etcetera, Etcetera.

    This is total baloney and counterproductive. If third party payers would honestly underwrite healthcare expenses instead of trying to practice medicine without a license, patients would be much better served.
    Even more egregious are their plans to claim as medical losses their outrageously wasteful, cruel, rude and self-serving prior-approval agencies. It defies the logic of any but their universe to consider these abominations to be a healthcare expense. I am proud to say that their greedy strong armed, mean practices have yet to deter me from providing the treatments and evaluations my patients require, no matter how expensive and frustrating it is.
    Insurers should not be permitted to include these wasteful self-serving scams to reach their 80-85 percent accounting of medical benefits provided to patients.
    Solvency of our entire healthcare delivery system is only attainable if these are halted immediately.
    Your consideration of these issues will be appreciated as development of the final regulation of the Medical Loss Standards continues.