One of the most controversial provisions of Affordable Care Act was codified today as the Department of Health and Human Services (HHS) issued new rules regarding medical loss ratio (MLR).

The regulations require health insurers to spend 80% to 85% of premiums on direct care for patients and efforts to improve care quality, starting in 2011. HHS Secretary Kathleen Sebelius said the rules were crafted to restrict the money insurers allot for administrative costs, such as executive salaries, overhead and marketing. 

“Thanks to the Affordable Care Act, millions of Americans will get better value for their health insurance premium dollar,” Sebelius said. “These new rules are an important step to hold insurance companies accountable and increase value for consumers.”

The Affordable Care Act required the National Association of Insurance Commissioners (NAIC) to develop uniform definitions and methodologies for calculating insurance companies’ medical loss ratios. 

The Independent Insurance Agents & Brokers of America (IIABA) expressed disappointment that the rule includes agent and broker commissions when calculating an insurer’s MLR, citing concerns that the rule will “lead to severe market disruption, especially in the individual and small group markets.”

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access