Unanimous Approval of Insurer Cost Reporting Tool

On August 17, 2010, the National Association of Insurance Commissioners (NAIC) voted unanimously to approve an insurer template form (‘blanks’) to be used by insurers when reporting costs and medical-loss-ratios (MLR) to the Department of Health and Human Services (HHS).  HHS is working closely with NAIC to develop regulations that enforce and implement MLR and other regulations derived from the Patient Protection and Affordable Care Act (ACA). To meet MLR guidelines, large group health plans must spend at least 85% of premiums on medical services and quality improvement, rather than on administrative costs or profits. The MLR for individual and small-group health plans must be at least 80%. Insurers must meet these guidelines by January 1, 2011.

The NAIC is expected to also advise HHS on the methodology used to determine what costs are included and excluded from an MLR.  As reported by Politico, controversy exists as America’s Health Insurance Plan (AHIP) released a letter to NAIC urging them to reconsider, among other things, excluding certain funds used to prevent fraud.  Policy makers and industry representatives have also disagreed on how to treat federal taxes paid by insurers as well as other costs.