In­surer re­bates un­der ACA loss-ra­tio rule fall in 2013

Modern Healthcare - - NEWS - By Bob Her­man

A fed­eral rule re­quir­ing health in­sur­ers to spend a min­i­mum per­cent­age of pre­mium dol­lars on med­i­cal care led to more than $332 mil­lion in con­sumer re­bates last year, HHS re­ported last week. The fig­ure is much lower than in the pre­vi­ous two years, which the Obama ad­min­is­tra­tion said re­flects that in­sur­ers charged lower rates so they would clear the thresh­old.

Re­bates is­sued un­der the med­i­cal­loss-ra­tio pro­vi­sion of the Af­ford­able Care Act to­taled $504 mil­lion in 2012 and $1.1 bil­lion in 2011. But HHS said the rule saved in­di­vid­ual con­sumers and em­ploy­ers a to­tal of $4.1 bil­lion in 2013 through lower pre­mi­ums.

In­tended to curb ex­ces­sive ad­min­is­tra­tive costs and prof­its, the med­i­cal­loss ra­tio re­quires health plans in in­di­vid­ual and small-group mar­kets to spend at least 80% of pre­mium dol­lars on health­care and ef­forts that im­prove care qual­ity. That fig­ure rises to 85% for in­sur­ers in the large-group mar­ket. Com­pa­nies that don’t meet the stan­dard must re­fund the dif­fer­ence to their cus­tomers.

More than 6.8 mil­lion Amer­i­cans ben­e­fited from a re­bate in 2013. The av­er­age med­i­cal-loss-ra­tio re­fund per fam­ily was $80. In­sur­ers can re­bate the money through a check in the mail, a re­im­burse­ment into a con­sumer’s in­sur­ance ac­count, a re­duc­tion in next year’s pre­mium or a low­ered ben­e­fit cost for em­ployer-spon­sored plans.

Nearly 100 in­sur­ance com­pa­nies re­funded at least $1 mil­lion. Blue Cross and Blue Shield of Florida re­funded the most, giv­ing back more than $10.1 mil­lion to its mem­bers. Neigh­bor­hood Health Plan, run by Bos­ton-based Part­ners Health­Care, is­sued more than $6 mil­lion in re­bates. Sev­eral sub­sidiary plans within Unit­edHealth Group, Aetna, Hu­mana and Cigna Corp. were also among the big re­baters.

States that re­ported the high­est med­i­cal-loss-ra­tio re­funds in 2013 were Florida, Mary­land, Mas­sachusetts and Mis­souri, ac­cord­ing to the HHS re­port. Florida alone ac­counted for 12.5% of all re­bates in 2013.

Amer­ica’s Health In­sur­ance Plans has ar­gued that the med­i­cal-loss-ra­tio rule ex­cludes le­git­i­mate ad­min­is­tra­tive costs such as fraud de­tec­tion and does noth­ing to ad­dress med­i­cal cost growth that drives pre­mium in­creases. Groups rep­re­sent­ing in­sur­ance agents and bro­kers are lob­by­ing to ex­clude their fees from the cal­cu­la­tion of ad­min­is­tra­tive costs.

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