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What is the MLR – Medical Loss Ratio Rule

The MLR – Medical Loss Ratio Rule requires Insurance Companies to  at least spend 80 percent of premium dollars on medical services – claims, over all, not on each policyholder.  If they don’t, they have to give refunds – rebates. * CMS.Gov * NAIC *  (health care.gov)       Thus, a higher premium plan MUST pay more in claims, a lower premium plan, can cut claims… by decreasing benefits such as,

 

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Rebates Return of Excess Premium

Blue Cross Group Rebates for 2019 *** FAQ’s

Blue Cross MLR why it's important

Aetna 2019 Rebates

aetna.com/affordable-care-act-employers

Then click on “Minimum Medical Loss Ratio”

What states are getting Rebates?

What types of plans are getting rebates?  

There might be rebates for 2018

Kaiser Family Foundation, in a  report published this week, said 2018 was “the most favorable year in the ACA-compliant market’s history.”  The insurers were so profitable, in fact, that they’ll have to rebate a record $800 million in overcharges to consumers by Sept. 30.  The expectation, however, was that the market would eventually stabilize. That’s exactly what has happened.  Financial conditions in the individual market began to improve in 2016, when average premiums first began to outpace claims. By last year, when average monthly premiums per enrollee were $559, they outpaced average per capita claims by $167.  * Los Angeles Times 5.8.2019 * 

Due to some better-than-expected claims results, along with cost-saving measures that have been implemented, Anthem’s Medical Loss Ratio (MLR) dropped below 80% over the 2015-2017 period.

What does this mean? It means that Anthem clients who were enrolled in the 2017 calendar year are getting some money back.

  • The annualized rebates will average approximately $142 per member over a 12-month period.
  • The rebate checks are distributed directly to the employer and should be sent by September 8th.
  • The employer has the option to distribute the rebate to employees or apply it toward future premiums.
  • Cal-COBRA members will receive a check directly from Anthem.
  • Anthem is required to inform employees that their employer is receiving a rebate. Employee letters are required to be mailed and will be sent by September 18th.

Anthem is committed to providing access to high-quality health care providers and services while working to drive down cost in the health care system. In addition, Anthem is striving to improve its customers’ experience, and efficiently managing their costs is part of that experience.

Blue Shield – Employer Rebates 11.1.2016  CA Health Line

Blue Shield accused of not giving high enough rebates for 2014 – LA Times 6.28.2016  – Lawsuit filed CA Health Line 7.18.2016  *  9.20.1206 Talking points for Small Biz Rebates for 2015

The LA Times reports on 8.5.2015 that Blue Shield (talking points) will pay out $83 million for 2014 an average of $136/policy holder and $21 million to 19,000 small employers, about $1,000.

Health Net 2014 results – no rebates

CA Companies appear to have fine tuned their premiums and claims to meet the MLR Rule and do not have to refund any money for 2013 (Word & Brown Survey)  Learn More in Blue Cross Presentation.

 

Rebates were expected to be 1.3 Billion in 2012!LATimes 4.27.2012 The Hill 5.2014   $332 Million in 2013 – as companies are fine tuning their rates to comply with the rule. Modern Health Care  United Health Care has announced a $3,500,000 refund to CA Small Biz. Blue Cross, Blue Shield & Kaiser $50 million LA Times 6.2.2012     Nor,  no one can say that Insurance is a Scam, it’s simply a mechanism to share the losses.  If you want to pay less premium and are willing to take more of the risk yourself, avoid the 20% “handling charge,” take the Bronze Plan, where you pay 40% of the essential covered benefits.   Click here for more info from United Health Care

Blue Shield is voluntarily limiting net income to 2% and giving refunds.

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General highlights of the regulations include:

  • Rate Increases must be certified by an Actuary CA SB 1163   New  Ballot Measure Prop 45  requires Deparment of Insurance Approval
  • MLR (Medical Loss Ratio)rebates will be sent to policy holders,which include employers or employee organizations as well as individual plan policyholders.
    • Insurers may distribute rebates to employers; in turn, employers would need to issue rebates to employees, based on employee contributions.
  • Policyholders are potentially eligible for a rebate determined on a “block” basis. The “block”is defined by:
    • Organization size (individual; small or large employer group)
    • Legal entity issuing coverage
    • State of issuance
    • Limited medical and expatriate international plans handled separately
  • Small group is defined as 2-50 employees unless a state defines it differently until at least 2016.
  • For the 2011 reporting year, issuers of limited medical (mini-med) and expatriate international plans are subject to separate calculation rules.
    • The plan’s numerator of the total claims incurred and expenditures for activities that improve health care quality would be multiplied by two.
    • Carriers will be required to complete additional quarterly reporting through 2011.
    • After reviewing this additional reporting, these adjustments will be revisited by the Secretary for 2012 and beyond.
  • Broker commissions will be included in the MLR calculation.
  • Non-U.S. insurance companies do not file MLR.

A preliminary analysis of the regulation and the data from this survey support four key points:

  • Initial compliance costs (especially accounting, auditing, and contracts with providers and employers) will likely exceed the estimates that accompanied the regulation by a substantial amount for many health plans.
  • Plans serving the individual and small-group markets are the most likely to be affected.
  • There is no guarantee that the federal MLR rule will lower health costs and premiums. In fact, the incentives under the rule may lead to higher administrative costs, higher-cost benefits, and higher premiums.
  • The rule could reduce the number of health plans competing in some markets. ahip hi wire.org   Like Aetna and PacifiCare leaving the CA Individual Market

The rate review  regulation process

 

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AHIP Graph of Medical Loss Ratio 80% Claims - 20% Operating Costs & Profit

AHIP Graph of Medical Loss Ratio 80% Claims – 20% Operating Costs & Profit

Steve's Explanation of MLR Medical Loss Ratio

 

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Our Webpage on MLR 

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Consumer Resources

CMS.Gov on MLR

Insure Me Kevin.com – How are premiums determined 3.9.2017

Blue Shield  FAQ’s

Patient Protection and Affordable Care Act (PPACA)

Government Tool to find out about Rate Increases or Loss Ratio for each Insurance Company

health care.gov FAQ  Value for Premium $$$

Health Net paid the minimums in 2011 and will not be sending rebates Aetna met minimums in CA

YouTube Channel

CIGNA’s informed on reform.com

Blue Cross Memo on MLR – Medical Loss Ratio’s

12/3/2010 Section 2718 900 pages

CA DOI Health Insurance Rate Filings

Steve’s Highlights of Blue Cross 7.2012 Small Group Filing

Code of Federal Regulations (CFR) 

 

PART 158—ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE REQUIREMENTS

Proposed Rules CMS 9930 P 10.27.2017

Contents

§158.101   Basis and scope.
§158.102   Applicability.
§158.103   Definitions.

Subpart B—Calculating and Providing the Rebate

§158.210   Minimum medical loss ratio.
§158.211   Requirement in States with a higher medical loss ratio.
§158.220   Aggregation of data in calculating an issuer’s medical loss ratio.
§158.221   Formula for calculating an issuer’s medical loss ratio.
§158.230   Credibility adjustment.
§158.231   Life-years used to determine credible experience.
§158.232   Calculating the credibility adjustment.
§158.240   Rebating premium if the applicable medical loss ratio standard is not met.
§158.241   Form of rebate.
§158.242   Recipients of rebates.
§158.243   De minimis rebates.
§158.244   Unclaimed rebates.
§158.250   Notice of rebates.
§158.251   Notice of MLR information.
§158.260   Reporting of rebates.
§158.270   Effect of rebate payments on solvency.

 

 

Regulations

 

 

Guidance

 

  • December 17, 2010 OCIIO Technical Guidance: Process for a State to Submit a Request for Adjustment to the Medical Loss Ratio Standard of PHS Act Section 2718 (PDF – 35 KB)
  • April 26, 2011 CCIIO Technical Guidance: Submission of 2011 Quarterly Reports of MLR Data by Issuers of “Mini-med” and Expatriate Plans (PDF – 26 KB)
  • May 13, 2011 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Interim Final Rule (PDF – 75 KB)
  • May 19, 2011 CCIIO Technical Guidance: Deadline for Submission of 2011 First Quarter MLR Data by Issuers of “Mini-med” and Expatriate Plans (PDF – 26 KB)
  • July 18, 2011 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Interim Final Rule (PDF – 66 KB)
  • February 10, 2012 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Interim Final Rule (PDF – 94 KB)
  • March 30, 2012 Memo to Insurance Companies: Medical Loss Ratio Annual Reporting Procedures (PDF – 96 KB)
  • April 20, 2012 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Regulation (PDF – 101 KB)
  • May 15, 2012 Memo to Insurance Companies: Guidance for Medical Loss Ratio Annual Reporting Form (PDF – 66 KB) Memo to Insurance Companies: Guidance for Medical Loss Ratio Notices of Rebates (PDF – 67 KB)
  • May 24, 2012 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Reporting Form (PDF – 91 KB)
  • May 30, 2012 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Reporting Requirements (PDF – 83 KB)
  • July 17, 2012 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Reporting and Rebate Requirements (PDF – 69 KB)
  • March 29, 2013 Memo to Insurance Companies: Guidance for 2012 Medical Loss Ratio Annual Reporting Form (PDF –119 KB) Memo to Insurance Companies: Announcement Regarding Training for 2012 Medical Loss Ratio Reporting Period (PDF – 125 KB)
  • April 5, 2013 CCIIO Technical Guidance: Questions and Answers Regarding the MLR Reporting and Rebate Requirements (PDF – 139 KB)
  • May 30, 2013 CCIIO Technical Guidance: Question and Answer Regarding the Requirement that Issuers of Certain Health Insurance Coverage Sold as Fixed Indemnity Insurance Submit an Annual Medical Loss Ratio (MLR) Report to the Secretary (PDF – 89 KB)
  • July 2, 2013 CCIIO Technical Guidance Questions and Answers Regarding the Medical Loss Ratio Reporting and Rebate Requirements [PDF, 109KB]
  • December 30, 2013 CCIIO Technical Guidance (CCIIO 2013—0004): Question and Answer Regarding the Medical Loss Ratio Reporting and Rebate Requirements [PDF, 120KB]
 
UnitedHealth to rebate $3.5 million to California small businesses

Nearly 4,400 small businesses in California will share in $3.5 million in rebates from insurance giant UnitedHealth Group

about $98 each for nearly 36,000 small-business employees and dependents

Other companies are expected to disclose the size of their customer rebates later this week and send out money by Aug. 1.

Under the federal and state laws, insurers must spend at least 80% of premiums collected on medical care for individual and small-group policies, which cover businesses with 50 or fewer workers

it’s up to employers to decide how they share those savings under the federal law. Some employers may split the rebate money based on the percentage workers contribute to their annual premiums or they could reduce next year’s premium by a similar amount.

but the rules don’t address the larger issue of rising medical costs.

“Rebates are one way to adjust the price of insurance,” Johnston said, “but the bigger issues are containing cost and extending coverage.”

latimes.com

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5 comments on “80% Medical Loss Ratio (MLR)”

  1. https://www.modernhealthcare.com/insurance/insurers-will-owe-massive-mlr-rebates-next-year-even-if-2020-normal

    Insurers will likely owe massive rebates to consumers next year, even if their 2020 profits are more typical than healthcare executives expect.

    More than 11.2 million people will qualify for nearly $2.5 billion in medical loss ratio rebates from insurers this year—an average of $219 per person—according to CMS data on Friday. It’s an increase of more than $1 billion over last year. That includes almost 5.2 million people enrolled in Affordable Care Act marketplace coverage, who will get more than $1.7 billion in rebates with an average refund of $322 per person. Rebates paid to people enrolled in small group market coverage will be much smaller. Roughly 3.4 million people will receive about $423 million in rebates, which works out to $124 per person.

    CMS calculates MLR rebates based on a three-year average of insurers’ spending. The agency will base next year’s refunds on 2018, 2019 and 2020 financial data. Several insurers have waived costs for COVID-19 treatment costs and telehealth visits and offered up premium holidays or rebates to lower the MLR rebates they could owe over the next couple of years.

    Reply

    • The DOL provides three options for distributing rebates:

      Reduce subscribers’ portions of the annual premium for the subsequent policy year for all subscribers covered under any group health policy offered by the plan.

      Reduce subscribers’ portions of the annual premium for the subsequent policy year for only those subscribers covered by the health policy on which the rebate is based.

      Provide a cash refund only to subscribers who were covered under the group health policy on which the rebate is based. Word & Brown

      Here’s a calculator for Broker use. If you appoint us as your broker, no extra charge, we get compensated by the Insurance Company at no extra charge to you!

      Rebate Calculator

      Reply

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