HHS Rep Promises MLR Flexibility For Employers

WASHINGTON--The Department of Health and Human Services last night issued a statement that it will allow great flexibility to employers in applying medical loss ratio (MLR) standards to certain health plans under the health care reform law.

The issue is of concern to health insurance agents and brokers, especially as it affects mini-med plans, which provide limited health care benefits to certain employees, such as part-time workers employed by large corporations.

The law's MLR provisions will require 85 percent of large group premiums and 80 percent of individual and small group coverage premiums to be spent on medical care and quality improvement activities. Carriers and plans that spend too little are supposed to pay rebates.

Although the National Association of Insurance Commissioners (NAIC) is close to completing its work on MLR standards, some employers must soon make decisions about coverage options for 2011, Jay Angoff, director of consumer information and insurance oversight for the Department of Health and Human Services (HHS), said.

"We fully intend to exercise our discretion under the new law to address the special circumstances of mini-med plans in the medical loss ratio calculations," Mr. Angoff stated.

The Affordable Care Act, the federal legislative package that includes the Patient Protection and Affordable Care Act (PPACA), mandates that MLR methods be designed to take into account the special situations of smaller plans, newer plans and different kinds of plans in general, Mr. Angoff said.

Mini-med plans are often characterized by lower premiums and relatively high patient copayment requirements, he noted.

"We intend to address these and other special circumstances in forthcoming regulations," Mr. Angoff said.

An official of an insurance trade group that asked not to be identified said the Angoff statement was issued because the timelines for implementation of the new rules for MLR "are either unrealistic or too tight for carriers and employers to carry out."

Moreover, the rules at this time are unknown, the official said.

Fast food company McDonald's, Oak Brook, Ill., voiced deep concern about the implications of the new rules for its own health care benefits

In response, Sen. John Rockefeller, D-W.Va., chairman of the Senate Commerce Committee demanded that BCS Financial Corporation, which provides the insurance product McDonald's offers its employees, give his committee information relating to the product BCS provides as compared to the provision in the health care reform law at issue.

Sen. Rockefeller said in the letter that the health care law requires insurers in the individual and small group markets to pay rebates if they spend less than 80 percent of their customers' premium dollars on medical care; in the large group market, the minimum ratio is 85 percent.

"The purpose of this provision is to make sure that most of consumers' insurance premiums are going to pay for medical care, not insurers' administrative costs and profits," Sen. Rockefeller said.

He said that if the information about a recent letter McDonald's sent to HHS officials is correct, "your company is apparently spending a significantly lower percentage of McDonald's employees' health care premiums on their medical care than the benchmarks established" in the health care law.

"If this is the case, McDonald's hourly wage workers are setting aside portions of their paychecks for an insurance product that may not be providing them a good value," the letter from Mr. Rockefeller said.