A key component of federal health reform appeared to move forward entering spring, as carriers finalized internal systems for providing rebates to customers for premiums not spent on medical losses.
Under the Patient Protection and Affordable Care Act, insurance carriers must spend 80 percent of the premiums they take in from individual and small group plans on medical care and quality improvement and at least 85 percent from large group plans of more than 100 employees.
If a carrier does not do so in a specific market, it must furnish a rebate on any difference to those customers.
Last month, Maine became the first state in the nation to win a waiver on implementing medical-loss ratios for the individual health insurance market, on grounds it would devastate carriers”™ business models. The U.S. Department of Health and Human Services lowered Maine”™s medical-loss ratio (MLR) threshold to 65 percent of premiums; exiting March, New Hampshire and more than a half-dozen other states had applied for similar waivers from HHS.
Few small businesses are yet cognizant that they could be in for significant rebates depending on their employee health profiles, according to David Lewis, CEO of the human resources advisory company OperationsInc in Stamford.
Since late last summer, the National Association of Insurance Commissioners has made available a draft document carriers can use to calculate their MLRs, which include moneys paid for actual medical bills but not for administrative expenses, such as workers”™ compensation or marketing expenditures.
NAIC was back in the news in late March, after the association backed away from what appeared to be its tacit support for a federal bill that would have exempted insurance broker commissions from the formula that determines health premium rebates.
The California-based group Consumer Watchdog had criticized the bill as effectively taking money from consumers and businesses and shifting it to brokers. It singled out Connecticut”™s insurance Commissioner Thomas Leonardi as among those who opposed the bill, which had been promoted by Florida”™s insurance commissioner.
Entering April, Aetna Inc. said it took another step toward complying with the MLR provisions of federal health reform, filing what it said amounted to a “dry run” based on patient data from 2010. The Hartford-based company said the figures it used in the dry run are not comparable to previous years, due to its past use of differing definitions on what constitutes a small business.
“We are a long way from knowing whether we will have to pay rebates on any markets next year,” Aetna stated in a written update on its own plans. “MLR reporting is a complex undertaking that required significant investment of time and resources. Aetna has invested more than $30 million in health care reform compliance overall. Ultimately, the MLR rebates will not offset the cost of implementing reform, nor will it slow skyrocketing medical cost increases.”
Early rebates are already helping some local companies. One ConnectiCare customer said a rebate helped defray his company”™s premium increase to just above 10 percent ”“ a significant hike, but much less than what the company would have paid for health insurance without a rebate in place.
Aetna said federal health reform could be greatly improved by allowing carriers to aggregate large-group employers at the national level to reduce administrative hassles for companies with workers in multiple states.
OperationsInc”™s Lewis noted that Fairfield County and by extension Connecticut has a relatively high concentration of such companies with national spread, hence its attraction for the handful of carriers like Aetna that likewise have a broad base.
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