Agencies Request Comments in Advance of Rulemaking over New Reporting Requirements For Health Insurers

The Departments of Labor, Treasury, and Health and Human Services are requesting comments – particularly from health insurers – on Section 2718 of the Public Health Service Act (PHS), which was added to the health care overhaul bill signed into law on March 23, 2010. This new section, among other things, requires health insurance issuers offering individual or group coverage to submit annual reports to the Secretary of Health and Human Services (HHS) on the ratio of incurred claims to earned premiums (medical loss ratio or “MLR”), and to provide rebates to enrollees if this spending does not meet minimum standards for a given plan year.

Specifically, Section 2718(a) requires that each report include the percentage of total premium revenue – after accounting for collections or receipts for risk adjustment and risk corridors and payments of reinsurance – that the coverage spends:

1. on reimbursement for clinical services provided to enrollees;
2. for activities that improve health care quality; and
3. on all other non-claims costs, including an explanation of the nature of these costs, excluding federal and state taxes and licensing or regulatory fees.

This new section also directs the Secretary to make these reports available to the public on the HHS’s website.

The new provisions require the Secretary to draft regulations to enforce the new requirements, including possible penalties. The agencies are therefore soliciting public comment in preparation for future rulemaking. While all may offer comments, the agencies are particularly interested in comments from health insurance issuers. The request for comments includes a number of specific questions aimed at the following areas: actual MLR experience and minimum MLR standards; uniform definitions and calculation methodologies; level of aggregation; data submission and public reporting; rebates; federal income tax; and enforcement.

Comments must be received on or before May 14, 2010, and include the identifier: DHHS–2010–MLR. Written comments (one original and two copies) may be mailed to: Department of Health and Human Services, Attention: DHHS–2010–MLR, Hubert H. Humphrey Building, Room 445–G, 200 Independence Avenue, SW., Washington, DC 20201. Alternatively, comments can be submitted through the federal eRulemaking Portal: http://www.regulations.gov.

This entry was written by Ilyse Schuman.

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