NU Online News Service, May 19, 12:05 p.m. EDT
The Department of Health and Human Services should not define a "medical loss" too rigidly in regulations developed around the new health care law, property and casualty and health agent trade groups said.
In a comment letter, the agent groups said a narrow medical loss ratio (MLR) definition could adversely impact spending on such important health plan activities as case management, wellness, disease management, and fraud and abuse prevention programs, among others.
The letter noted that these aspects of medical care and health plan coverage were given "heightened emphasis" by Congress in the health reform law because they improve care quality and help contain medical treatment costs.
"If [these aspects] are somehow diminished due to narrow MLR definitions and enforcement, the quality of care delivery for consumers will deteriorate and health care costs will surely increase," the letter stated.
A provision contained within the Patient Protection and Affordable Care Act (http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3590enr.txt.pdf), requires health insurance health plans offering individual or group coverage to submit to HHS an annual report "concerning the ratio of the incurred loss (or incurred claims) plus the loss adjustment expense (or change in contract reserves) to earned premiums."
The agents' letter asked HHS to consider NAIC accounting rules dealing with "medical loss" when defining MLR in the new regulations, but widen them based on congressional intent.
The NAIC accounting standard related to MLR, the letter noted, defines "medical loss" as the value of medical claims an insurer actually paid ("incurred claims"), plus the amount of money the insurer sets aside to pay future claims ("contract reserves").
But the new law "takes a broader view of MLRs," according to the letter.
The new federal requirements call for health insurance issuers offering group or individual coverage to report publicly the percentage of total premium revenue that the coverage spends on reimbursement for clinical services provided to health plan enrollees.
Janet Trautwein, executive vice president and CEO of the National Association of Health Underwriters (NAHU), told NU Online News Service that NAHU "strongly believes that health care consumers will best be served by a definition of clinical services and activities that improve health care quality which is comprehensive and inclusive."
The definition should be comprehensive and inclusive, she said, "so that it adequately accounts for the wide spectrum and types of insurer activities that contribute to better health outcomes and health care delivery and provides a level playing field among different types of insurers and products."
In addition to NAHU, the Independent Insurance Agents and Brokers of America, the Council of Insurance Agents and Brokers, and the National Association of Insurance and Financial Advisors signed the letter.
The letter was submitted Friday as part of a request for input on how medical loss should be defined in regulations scheduled to go into effect in January 2011 as part of the new health care reform law.
Thirty-five groups submitted comments on the issue.
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