Jaan Sidorov of the Disease Management Care Blog has started deciphering the specifics of the Medical Loss Ratio requirements, and it looks like the National Association of Insurance Commissioners (NAIC) is taking a rather inclusive view of medicine in their interpretation of the law. Ever since the MLR minimums were laid out in the PPACA, there has been much debate over what would be considered administrative costs. It’s heartening to see the NAIC giving so much leeway in terms of what will be considered medical expenses.
On page 8 of the proposal, it’s noted that community benefit program expenses “for activities or programs that seek to achieve the objectives of improving access to health services, enhancing public health and relief of government burden” can be included in medical expenses. So can expenses related to avoiding repeat hospitalizations (including post-discharge counseling) and expenses for programs that improve patient safety and reduce medical errors (page 17). In addition, wellness program (ie, programs designed to help people combat obesity or tobacco use, public health education, ect.) expenses can be counted as medical expenses.
Some aspects of a medical loss ratio are pretty clear: health insurance employee and broker salaries, for example, are obviously not medical expenses and can pretty easily be noted in the administrative expense column (15% – 20% of premium dollars will still be allocated to administrative costs – those expenses are real and necessary). On the other hand, payments to hospitals and doctors for acute care are obviously medical expenses and should count as such. But there are a lot of grey areas in between, and the proposal released by the NAIC looks like it takes a very broad view of what comprises medical expenses. This should please a lot of people who may have been worried that the MLR requirements were going to signal the end of things like insurer-funded wellness programs and disease management.
Jaan’s article was included in the Cavalcade of Risk this week.