In­sur­ers slammed on loss ra­tios

Med­i­cal loss-ra­tio def­i­ni­tion needed by HHS

Modern Healthcare - - Front Page - Re­becca Ve­sely

Providers and in­sur­ers are at odds over how health plans should be able to spend mem­ber pre­mium dol­lars—a hotly de­bated is­sue that will be de­cided soon in forth­com­ing reg­u­la­tions from HHS. Not only are in­sur­ers’ prof­its at stake, but also some providers say the reg­u­la­tions could de­ter­mine how care co­or­di­na­tion evolves and how ad­min­is­tra­tive waste and in­ef­fi­cien­cies are tack­led.

Un­der the new health re­form law, start­ing next year in­sur­ers must spend at least 85% of sub­scriber premi­ums on med­i­cal costs in group cov­er­age plans and at least 80% of premi­ums on med­i­cal costs for in­di­vid­ual plans. In­sur­ers that don’t meet this re­quire­ment must give the dol­lars back to mem­bers in the form of re­bates.

This med­i­cal loss-ra­tio pro­vi­sion is de­signed to pre­vent in­sur­ers from over­spend­ing on ad­min­is­tra­tive costs such as mar­ket­ing, salaries, un­der­writ­ing, claims pro­cess­ing and over­head.

But the law, as writ­ten, al­lows for cer­tain cat­e­gories of ex­penses to be counted in that 80% to 85% ra­tio. For in­stance, “ac­tiv­i­ties that im­prove health­care qual­ity” are in­cluded. Now, it is up to the HHS to de­fine these ac­tiv­i­ties. The Na­tional As­so­ci­a­tion of In­surance Com­mis­sion­ers is ex­pected to is­sue com­ment to HHS by June 1.

Lead­ing provider groups— in­clud­ing the Amer­i­can Hos­pi­tal As­so­ci­a­tion and the Fed­er­a­tion of Amer­i­can Hos­pi­tals—say this cat­e­gory should con­sist only of pro­grams or ac­tiv­i­ties that di­rectly im­prove pa­tients’ qual­ity of care.

But Amer­ica’s Health In­surance Plans and the Blue Cross and Blue Shield As­so­ci­a­tion, in pub­lic com­ments to HHS, list at least 13 cat­e­gories of ac­tiv­i­ties that they say should, at min­i­mum, be put in the qual­ity im­prove­ment cat­e­gory (See chart, p. 9).

The two in­surer groups say these ac­tiv­i­ties are con­sis­tent with the In­sti­tute of Medicine’s def­i­ni­tion of qual­ity, or that they con­trib­ute to en­sur­ing qual­ity, based on cri­te­ria de­vel­oped by the Agency for Health­care Re­search and Qual­ity.

In­sur­ers warn that clas­si­fy­ing these pro­grams as ad­min­is­tra­tive ex­penses could cause their demise. “These im­por­tant ac­tiv­i­ties, which are of­ten done in con­cert with the provider com­mu­nity, would likely be squeezed out or elim­i­nated al­to­gether if not con­sid­ered qual­ity im­prove­ment and plans are forced to cut back on ser­vices to meet the min­i­mum-loss ra­tio re­quire­ments,” Alissa Fox, se­nior vice pres­i­dent, of­fice of pol­icy and rep­re­sen­ta­tion, for the Blues, wrote on May 14 in the group’s 19-page pub­lic com­ment let­ter to HHS. Providers dis­agree. “I don’t think the so­lu­tion to the prob­lem is to pack into the pa­tient-care side ev­ery ac­tiv­ity they (the in­sur­ers) want be­cause then, at the end of the day, noth­ing changes,” said Chip Kahn, pres­i­dent of the Fed­er­a­tion of Amer­i­can Hos­pi­tals. “You have to draw the line some­where or there’s not go­ing to be much money left over for doc­tors and hos­pi­tals.”

The AHA is rec­om­mend­ing HHS use a “de­ci­sion tree anal­y­sis”—a se­ries of ques­tions prob­ing whether the ac­tiv­ity’s core pur­pose is to truly im­prove qual­ity, or sim­ply re­duce

Pryga: We need to re­move waste to im­prove ef­fi­ciency.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.