WASHINGTON(Reuters) - U.S. health insurers face a host of new spending rules under federal government regulations released on Monday that dictate how they allocate customers' monthly premium dollars toward medical care rather than other items such as profits or overhead.
Such spending limits, known as a medical loss ratio or MLR, were required under the healthcare overhaul passed in March and largely reflect earlier recommendations by a key group of state insurance regulators.
Uncertainty over the final rules has hung over the health insurance industry. Companies have said they were waiting for the rules to become concrete before giving specific financial outlooks for next year, while investors have been hesitant to buy into the group.
The new MLR rules will help "guarantee that consumers get the most out of their premium dollars," U.S. Health Secretary Kathleen Sebelius said at a press conference, adding that "overhead costs contribute little or nothing to the care of patients and health of Americans."
The rules affect insurers such as Aetna Inc, Cigna Corp, Humana Inc, UnitedHealth Group Inc and WellPoint Inc, among others.
In releasing the final rules, HHS officials said they followed the advice of the National Association of Insurance Commissioners (NAIC) on many issues such as taxes, state waivers and consumer rebates.
The healthcare law requires large group health plans to allocate at least 85 cents per premium dollar to medical care, not administrative costs or profit. Plans for individuals or small groups must spend 80 cents per dollar.
If plans do not spend at least that much on care, policy holders get a rebate. HHS said Monday up to 9 million Americans could be eligible for up to $1.4 billion in rebates starting in 2012.
Although the limits are mandated in the new healthcare law, insurers such as Aetna Inc and WellPoint Inc did win some concessions from the U.S. government surrounding implementation of the rules.
Under the final rules unveiled by the Department of Health and Human Services (HHS), insurers will be able to deduct federal and state taxes from premium dollars to help meet the new spending thresholds but not taxes related to investments or capital gains.
It also allows some exemptions for smaller plans, new insurance offerings, and "mini-med" policies that offer limited coverage.
A variety of experts from Wall Street analysts to state insurance officials have openly worried the new spending limits could push some insurers out of certain markets, affecting not only company bottom lines but also consumer choice.
Consumer advocates also worried fewer options in some states could destabilize the market, especially since other new rules meant to boost demand for policies do not take effect until 2014 when Americans must buy coverage or face fines.
But HHS officials said on Monday that while some people with individual health policies are in plans that fail to meet the new spending rules, most insurers should be able adjust to meet the rules.
"The health insurance industry today is well-positioned to meet the new MLR standards," said Jay Angoff, director of HHS' Office of Consumer Information and Insurance Oversight.
Under the rules, states can seek certain exemptions for up to three years to help keep insurers from abandoning their market. The states will not be granted blanket waivers but can seek adjusted MLR spending limits. So far, Iowa, Georgia, Maine and South Carolina have sought such help.
Other industry exemptions include a one-year grace period for so-called mini-medical plans that offer limited coverage and generated headlines when some employers such as McDonald's Corp said they might have to stop offering them because of the rules. Plans for U.S. workers based overseas also have a one-year deferral while HHS gathers data.
Small plans with less than 75,000 enrollees in a state are also allowed to adjust their calculations because of their small size, while companies offering a new insurance policy will have one year before having to meet the rules.
SOURCE: http://link.reuters.com/gyf66q U.S. Department of Health and Human Services, online November 22, 2010.
No comments:
Post a Comment