Starting next year, the healthcare reform law requires insurers to spend at least 80-85 percent of premiums on healthcare and quality improvement activities. The 80 percent level refers small-business plans and the 85 percent level to large-company plans.
In drafting the regulations, HHS had to determine what constitutes healthcare and quality improvement expenses. The final rules mostly followed recommendations issued last month by the National Association of Insurance Commissioners. Insurers have been trying to push as many expenses as possible onto the healthcare side and keep them off the administrative side. But in the industry’s last battle, it failed to convince HHS to move insurance-broker commissions from the administrative to the healthcare side.
In addition, the regulations require insurers to publicly report how they spend premium dollars and provide rebates to consumers if insurers do not meet the medical loss ratios.
Read the HHS release on health insurance.
Read more coverage of the medical loss ratios:
– NAIC Subpanel Adopts Medical Loss Ratio, Regulations Await Final Approval
– Senator Warns Insurers May Skirt New Minimums on Patient Care Costs
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