Medical loss ratio debate sparks concerns over fraud prevention

Healthcare reform regulations currently under debate could inadvertently "discourage" fraud prevention investments, a national expert argued Monday.

At issue is the law's medical loss ratio provision, which mandates that health plans spend a minimum portion of premiums on medical care or on activities that improve the quality of care. State insurance commissioners tasked with writing the definitions are considering draft rules that would treat fraud as administrative rather than healthcare expenses; they're expected to adopt the regulations later this month.

"There is undoubtedly a direct connection between health care fraud and health care quality," National Health Care Anti-Fraud Association Executive Director Louis Saccoccio wrote Monday on the Kaiser Health News Web site. 

After praising the Obama administration and Congress for making healthcare fraud prevention a "national priority," Saccoccio argues that "this commitment is being undermined by the National Association of Insurance Commissioners' recent draft regulation on medical loss ratios, which treats private plans' spending on fraud detection and prevention as nonessential to quality health care."

An NAIC staffer said the health reform law "makes pretty clear how to define quality improvement efforts."

"Fraud prevention is considered cost containment," the staffer adds, "which is important and valuable to the operations of any good insurer, but (the law) did not intend for such efforts to be subtracted from the premiums calculation for" the medical loss ratio.

The anti-fraud group is a private-public partnership between private health insurers and federal and state government officials, founded in 1985.

Fraud schemes exists both inside and outside the healthcare sector, Saccoccio writes, and include the theft of insurance identification numbers that "not only expose insurance plans to theft, but endanger the patients whose identities have been stolen by leading to false information being entered into their medical records."

This post was updated with NAIC comments at 5:45 p.m.