Medical Loss Ratio and What It Means
With the Supreme Court’s decision upholding the Affordable Care Act, Blue KC will be sending Medical Loss Ratio (MLR) rebate checks to members and groups by August 1. Members who are not eligible for a rebate will receive a postcard notice in August.
Blue Cross and Blue Shield of Kansas City Statement on ACA
Today, the Supreme Court of the United States upheld key provisions of the Affordable Care Act (ACA).
Blue Cross and Blue Shield of Kansas City (Blue KC) will continue to implement the law while working with policymakers to fix provisions that will increase costs, such as the health insurance excise tax that will add hundreds of dollars to families’ premiums every year. We will also continue to work closely with regulators to ensure a fair marketplace.
We are pressing forward and are fully prepared to implement the regulations that have been issued and to help our members navigate the evolving health insurance marketplace.
Blue KC’s mission continues to be focused on using our role as the area’s leading health insurer to provide affordable access to health care and to improve the health and wellness of our members.
New Proposed Fees on Health Insurance Issuers and Plan Sponsors
On April 13, 2012, the Department of Health and Human Services (HHS) issued a notice outlining the fees imposed on issuers of health insurance policies and plan sponsors of certain self-insured health plans. The fees are part of the Patient Protection and Affordable Care Act (PPACA) and will help fund the Patient-Centered Outcomes Research Trust Fund’s private, non-profit Institute. The Patient-Centered Outcomes Research Institute is intended to perform research, advance evidence-based medicine, and provide insurers and consumers information for health care decision making.
Blue KC Summary of Supreme Court Oral Arguments for March 28, 2012 – Medicaid Expansion
- There might be a majority in support of striking down the expansion, but this is far from certain.
- The key question is whether the expansion of Medicaid is voluntary or not. The government argues that the States could always refuse and stop participating in Medicaid. The challengers argue that Medicaid funds are such a large part of State budgets that they don’t really have a choice.
Blue KC Summary of Supreme Court Oral Arguments for March 28, 2012 — Severability
- Analysts were divided on predictions for how the Court will rule on this question.
- The arguments about severability deal with what happens to the rest of PPACA if the individual mandate is struck down.
- Three options were suggested:
- Strike down the whole law.
- Strike down the mandate, guaranteed issue, and community rating.
- Strike down only the mandate.
Blue KC Summary of Supreme Court Oral Arguments for March 27, 2012
- Analysts are now predicting the individual mandate is more likely to be struck down than upheld. Justice Kennedy is the key vote.
- The argument hinges on two questions:
- Is the market being regulated “health care” or “health insurance?” Almost everyone will use health care, but the same is not true of insurance.
- Where is the limit to government power under the commerce clause?
Blue KC Summary of Supreme Court Oral Arguments for March 26, 2012
- The question argued Monday will probably not delay a decision on whether the individual mandate is constitutional.
- Both sides want the Supreme Court to decide the case now and not wait until after 2014 when the law is in effect.
- The Court appointed a representative to argue for delay, but the Justices did not seem receptive to his arguments.
Medical Loss Ratio 101
According to the Affordable Care Act’s Medical Loss Ratio (MLR) requirements, insurers are required to spend at least 80 percent in the individual and small group market of each premium dollar on care their members receive or improving the quality of that care. Insurers must spend at least 85 percent in the large group market. Insurance companies who do not meet the MLR standard are required to issue rebates to their members in 2012.
We believe that MLR requirements do not address the underlying cause of persistently rising healthcare costs.
Update on Summary of Benefits and Coverage
On Feb. 9, 2012, Health and Human Services set forth final regulations on the new health insurance summaries. Health plans will be required to provide these summaries to consumers in an effort to help buyers make informed decisions. Simply stated, health insurers and employers that offer group and individual policies must provide comparable information about health plan benefits and coverage on their Summary of Benefits and Coverage (SBC) forms.
Guidelines on the new SBCs include:
- A new, standardized health plan comparison tool known as “coverage examples” will be provided. This format will model the Nutrition Facts label on packaged foods.
- A list of definitions (“Uniform Glossary”) that clearly explains commonly-used terms, such as “deductible,” “co-payment,” and “co-insurance” will be provided.
- All information will be printed in at least 12-point type.
Insurers and group health plans will begin providing SBC’s and the uniform glossary to consumers starting Sept. 23, 2012. Blue Cross and Blue Shield of Kansas City (Blue KC) is working to comply with these guidelines. Blue KC customers will receive the benefit summary documents they receive now, in addition to the new SBCs in September. This will ensure that Blue KC customers have the most complete benefits information possible.
More updates on this form and others will be provided as new guidelines become available.
Update on MLR Requirements
On March 23, 2010, President Obama signed into law the “Patient Protection and Affordable Care Act” (PPACA) as part of the national health care reform efforts. Included in this act are requirements for Medical Loss Ratio (MLR). MLR requires insurers to spend a specific percentage of their premium dollar on health care rather than administration costs. Insurers who do not meet the standard are required to provide rebates to their customers.