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Focus on Regulation

CMS Limits Reporting Requirements for Plans that Meet Medical Loss Ratio Standard

The Patient Protection and Affordable Care Act (PPACA) restricts the percent of premium dollars that health insurers may spend on administration, marketing and profits, the Medical Loss Ratio (MLR). The Centers for Medicare and Medicaid Services (CMS) has amended its regulations governing MLR standards for health insurers to create notice requirements for insurers who meet or exceed applicable MLR standards.

In December 2011, CMS published an interim final rule and a final rule with comment that established notice requirements applicable to health insurance issuers who owed rebates for failure to meet the applicable MLR standard, and addressed the treatment of mini-med and expatriate policies with regards to MLR requirements.  At that time, CMS invited comments regarding (a) whether insurers who met or exceeded the MLR standard in a given year should be required to provide notice to policyholders and stakeholders, and (b) whether issuers should be required to include in their notices information about the issuer’s MLR from the previous year.

 After reviewing submitted comments, CMS released amendments to the regulations that:

  • Creates a “simple straightforward notice requirement” for health insurers that meet or exceed the MLR standards set in PPACA;
  • Only requires the above notice be sent for the 2011 reporting year; and
  • Does not require issuers to provide information on the prior year MLR in their notice.

The rule notes that information about a specific insurer’s past years MLR will be available on the HHS website.