How Will ICD-10 Costs Be Affected by the Medical Loss Ratio Rule?

Roughly one week ago, the Department of Health and Human Services and CMS issued final regulations on the medical loss ratio, which guarantees health insurers spend at least 80 percent (for individual and small group markets) or 85 percent (for large group markets) of consumer premiums on medical care.

Within the final rule, the issue of ICD-10 conversion costs was also addressed. For each of the MLR reporting years 2012 and 2013, health insurers may account for ICD-10 conversion costs of up to 0.3 percent of earned premiums in the relevant state market as a “quality improving activity” in their MLR calculation.

Overall, HHS expects that accounting for these costs in MLR calculations will only have a small effect on MLRs and rebates sent back to consumers.

How Will ICD-10 Costs Be Affected by the Medical Loss Ratio Rule?

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