State regulators' vote on medical loss ratio upsets insurers

The liberal grassroots group Health Care for America Now applauded NAIC's vote.

"Today the NAIC took a step toward ending the health insurance companies' stranglehold on our health care," HCAN Executive Director Ethan Rome said in a statement. "The top state insurance regulators from across the nation voted to put patient care above insurance company profits."

The NAIC is charged with defining key provisions of the healthcare reform law, including the controversial medical loss ratio. 


Under the new healthcare reform law, healthcare plans must spend at least 80 percent of premiums in the individual and small-group markets on healthcare (85 percent for large-group plans). If they fall short, the plans must offer rebates to their customers.

During their annual meeting in Seattle, the state commissioners overwhelmingly approved the forms — called blanks — that healthcare plans will submit to regulators to report the proportion of premiums they spend on healthcare. 

"The form's approval represents the culmination of months of work ... through meetings, conference calls and public comment periods," the NAIC said in a statement. "The Blanks form is just one of many efforts being executed by the NAIC to meet the requirements of the health care law. State regulators and NAIC staff continue to work diligently to execute these efforts in a thorough and transparent manner."

AHIP raised several concerns with the blanks.

In an 11-page letter sent last week to NAIC President Jane Cline, the insurance lobby group asked that the following costs in particular be considered:  

• a retrospective review of claims to prevent and detect fraud — "a key tool in targeting the dangerous overutilization of services, falsification of medical records, and medical identity theft";


• the adoption of new codes for diagnostics and procedures (ICD-10) that will "improve the ability of health plans to share clinical data among clinicians for quality improvement and care coordination activities, thereby promoting a better understanding of diagnoses and procedures at institutional settings of care to allow better treatment and quality improvement";

• a concurrent utilization review of procedures such as imaging services, which health experts say are vastly overused in the U.S.;

• and wellness incentives in the individual market.

The blanks are only the first step towards defining the medical loss ratio.

Questions remain as to which federal taxes can be excluded when calculating it, for example, or what constitutes quality improvements.