NAIC subpanel adopts medical loss ratio

A subpanel of the National Association of Insurance Commissioners voted Monday afternoon to adopt draft medical loss ratio regulations, teeing up final approval later this month.

The health reform law mandates that health plans spend a minimum percentage of premiums on care or pay rebates to their customers. The state insurance commissioners are tasked with defining the ratio.

The model regulation was adopted with some edits, and it's expected to be open for comments through Oct. 11 once the changes are made. 

"The changes are primarily language changes for clarification, not material changes to definitions or methods," an NAIC staffer told The Hill.

Commissioners still don't see eye-to-eye on three major topics, Health Policy and Legislation Manager Brian Webb said last week:

- Aggregation: The draft regulation calls for the medical loss ratio to be calculated for each company by state. The large-group health plans want to be able to aggregate nationwide, Webb said;

- Taxes: The draft calls for deducting most taxes from premiums when calculating the ratio, but Democratic committee chairmen in Congress have requested a more restrictive definition that would lead to a higher effective ratio;

- Fluctuations: Commissioners want to allow adjustments over several years for smaller health plans, to avoid penalizing them if they have a bad year with unusually large pay-outs.

A larger panel is scheduled to vote Oct. 14, and if the definitions are accepted the regulation could come before the NAIC's executive/plenary session at the Fall National Meeting in Orlando for final approval on Oct. 21.