Interim Rule Released on Medical Loss Ratios
PPACA Regulatory Update
November, 22, 2010

As reported by SIIA’s Government Relations Staff, Federal agencies will be continually issuing regulations and notices of guidance pertaining to how provisions of the newly enacted Patient Protection and Affordable Care Act will be implemented. SIIA staff will develop summaries of these and distribute along with the full documents as soon as they are released.

Department Health and Human Releases Interim Final Rules on Allowable Medical Loss Ratios

The Department of Health and Human Services today released their final interim rule on Medical Loss Ratios that will govern how fully-insured carriers can spend beneficiaries’ premiums.

The interim final rule on Medical Loss Ratio requires carriers to spend 80 percent (small group coverage) or 85 percent (for large group coverage) of premium dollars on medical care. Carriers may use the remaining amount of premiums on things such as administrative costs and profit. The regulation closely follows the NAIC’s recommendation recently released.Carriers are required to report to HHS each year on their spending practices. Any plans that spend less than the required amount on claims are required to issues refunds to that plan’s beneficiaries.The interim rules also reaffirms the one year exemption from the MLR requirements for limited-benefit plans. Going forward, HHS will develop a MLR formula specific to these plans that recognizes their “unusual expense and premium structures.”

Stay Informed on the PPACA

SIIA's Government Relations Staff is continually updating SIIA's PPACA In-Depth Analysis as regulations and guidance are issued by Federal agencies and Congress. Please continue to visit our website to review the most up-to-date information - http://www.siia.org/i4a/pages/index.cfm?pageID=5401.