Proponents of mini-med plans were waiting to exhale until federal regulators showed a willingness to stave off the effect that a key provision of the Patient Protection and Affordable Care Act would have on these voluntary benefits for employees seeking affordable, baseline health insurance coverage.
Now they’re breathing easier, but surely will sigh over additional reporting requirements with regard to notifying participants in writing about qualifying for a one-year waiver from the mandated minimum annual dollar limit of $750,000 in 2011, which rises to $2 million by 2013.
The number of mini-med plans receiving waivers from the U.S. Department of Health and Human Services (HHS) for 2011 has nearly quadrupled in recent months to 117 from 30.
It’s also worth noting that an interim final rule to implement medical loss ratio (MLR) requirements for health insurers is scheduled to be published on Dec. 1 and take effect Jan. 1, 2011.
Some organizations, such as the Medical Group Management Association, hope the MLR requirement compels insurers to become more efficient on the administration side and accelerate adoption of standards-based electronic financial and administrative transactions.
To reduce excessive administrative costs, the health care reform law mandates that insurers spend 85% of revenue from premiums on clinical care for the large group market and 80% for the small group market.
Insurers have been negotiating with federal regulators in hopes of getting to the 15% to 20% administrative threshold by having some costs that now are considered administrative counted on the clinical side.
The MLR cap on carriers’ administrative fees will have a "devastating effect on the private marketplace and consumers will be negatively impacted,” predicts Charles Symington, senior vice president for government affairs for the Independent Insurance Agents & Brokers of America predicts that. "After hearing from various interested parties if HHS does not fix this language before the rule is final, we hope that Congress will step in and revise the MLR formula through the legislative process."
As expected, the rule has left agents and brokers on the administrative side of MLR calculations. HHS has been seeking comments on the issues related to insurance agents and brokers that are expected to unfold before 2014 when state-run insurance exchanges are slated to take effect.
Diane Boyle, vice president of federal government relations for the National Association of Insurance and Financial Advisors, expected the ruling but couldn’t help but be "disappointed that they didn’t take the view that agents’ commissions should be treated as a pass-through."
Others have had cause to celebrate. Cigna Voluntary, for instance, received a waiver for its entire book of business – amounting to about 1,700 employers and 250,000 customers – in the first round of approvals.
Mark Bailey, the company’s senior vice president, recently reported that after the waiver was announced, “we were getting a lot of phone calls, e-mails, shout-outs saying, ‘You got that? It looks like we can continue to offer it to our clients.’”
As cumbersome as it may appear for businesses to comply with this landmark legislation, some observers believe key provisions such as the MLR ultimately will help weed waste from the system.
Judy Dugan, research director of the advocacy group Consumer Watchdog, didn’t think the rules were “as bad as they could have been, considering the demands of the health insurance lobbyists who swarmed the agency.” Her organization lauded HHS for not allowing "much broader loopholes that would have obliterated the intent of the minimum medical loss ratio."
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