HHS releases Medical Loss Ratio Regulations

Yesterday, HHS released proposed regulations requiring insurance companies to spend 80-85% of the health care premiums they receive on actual health care services and quality improvement activities rather than administrative costs. This issue is commonly referred to as the “medical loss ratio.” Insurers will be required to begin tracking their spending in 2011, and in 2012 will report on the results. In 2012, any insurer that does not spend 80-85% on actual health care services and quality improvement activities will also have to give plan members a rebate based on their excess spending in administrative costs.

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