As detailed in a previous Focus article, the Patient Protection and Affordable Care Act (PPACA) charges the National Association of Insurance Commissioners (NAIC) with the initial development of rules for the Medical Loss Ratio (MLR) by December 31, 2010. Late last week, and as reported in the NCMS Bulletin, October 22, 2010, the NAIC officially adopted its model regulation for submission to the U.S. Secretary of Health and Human Services Kathleen Sibelius. With the NAIC’s recommendations now complete, it will now be up to the Secretary to decide whether she will promulgate the model regulation as is, or make changes.
A huge question of importance is what expenses may a health plan count towards quality improvement, since health plans can count “quality improvement expenses” within the 85% or 80% part of the ratio. The NAIC describes that term as “all plan activities that are designed to improve health care quality and increase the likelihood of desired health outcomes in ways that are capable of being objectively measured and of producing verifiable results and achievements.” The expenses must be directed toward individual enrollees and should be grounded in evidence-based medicine. Some broad categories of those expenses include:
- Costs for improving health outcomes
- Improving patient safety and reducing medical errors
- Hospital readmission prevention activities
- Wellness & health promotion activities
- HIT expenses for health care quality improvements
More specific examples within each of these categories can be reviewed in the model regulation. For physicians, the items that do not count as quality are as important as those that do. The NAIC listed some examples of expenses that would not count as quality improvement:
- Retrospective and concurrent utilization review
- Fraud prevention activities
- Developing and executing provider contracts and maintaining a provider network
- Provider credentialing
The model regulation also details how a health plan must calculate rebate amounts due to their members if the health plan fails to achieve the prescribed MLR.
The NCMS will continue to monitor actions at the federal level concerning the medical loss ratio as it moves toward final adoption.