The National Association of Insurance Commissioners (NAIC) yesterday took an initial step toward comprehensive federal rules that determine whether health insurance companies spend an appropriate share of premium dollars on patient care rather than profits, CEO pay, lobbying and administration. The association approved a set of disclosure forms that will be filed by health insurers. Still, much remains to be done to ensure that the NAIC’s final product and subsequent federal rules are not weakened by the health insurance industry, which has spent more than $769 million on lobbying since 2007.

Yesterday’s vote affects how companies calculate the medical-loss ratio (MLR), which is the percentage of premium revenue spent on actual medical services. The Affordable Care Act, enacted on March 23, 2010, requires insurers to spend on patient care and quality improvement at least 80 percent of health plan premiums collected from individuals and small employers and 85 percent of premiums from large employers.

Many challenges remain before we can declare victory in the Medical Loss Ratio (MLR) fight. Pivotal aspects of the technical rules discussed yesterday remain unresolved, including crucial decisions on how to treat federal taxes and agent/broker fees. The NAIC still has work to do, and it should finish its deliberations soon so the Department of Health and Human Services (HHS) can swiftly develop final rules that take effect on schedule for 2011 health plans.

This entry was posted on August 18, 2010 at 9:20 am. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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