Report: Insurers Spent Less Than 1% of Premiums on Quality Improvement

On average, payors spent less than 1 percent of premiums on healthcare quality improvement activities in 2011, according to a report by the Commonwealth Fund.

The report, "Insurers' Medical Loss Ratios and Quality Improvement Spending in 2011," examines differences in medical loss ratios, consumer rebates and quality improvement expenses across different kinds of insurance companies, including provider- and non-provider-sponsored, non-profit, for-profit, publicly traded and non-publicly traded plans. Quality improvement activities include activities likely to improve health outcomes; prevent hospital readmissions; improve patient safety and reduce medical errors; and increase wellness and health promotion, according to the report.



Under the Patient Protection and Affordable Care Act's medical loss ratio rule, insurers must spend at least 80 or 85 percent of premiums on medical claims and quality improvement activities or pay rebates to consumers. In 2011, payors spent a total $2.3 billion on quality improvement activities, accounting for 0.74 percent of premium revenue. Insurers paid an additional $1.1 billion, or 0.35 percent, of premium revenue to providers to encourage quality improvement through incentives and bonuses in 2011, according to the report.

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