CMS Issues New Guidance on Medical Loss Ratio Notice Requirements

The Centers for Medicare and Medicaid Services (CMS) has released new guidance (pdf) regarding the Affordable Care Act’s Medical Loss Ratio (MLR) reporting and rebate requirements. The new health care reform law mandates that health insurers, depending on the size of the insurance market, spend between 80 and 85% of premium revenue on reimbursement for clinical services or activities that improve health care quality, or provide a rebate to their enrollees. The law also imposes certain reporting requirements for insurers. The new technical guidance (CCIIO 2012-0005) provides more information on the notices of MLR rebate and information that must be issued to policyholders and subscribers, and further explains the definition of “plan document” for MLR purposes.

For issuers that are required to provide a MLR rebate notice directly to the group policyholder, the guidance explains that such notice must be provided to all policy subscribers enrolled in the group health plan during the MLR reporting year, with the exception of those who are no longer enrolled when the rebate is issued. Notice to the excepted group is optional.

An issuer whose MLR meets or exceeds the required threshold is required to provide policyholders and group subscribers with a notice of MLR information with the first “plan document” provided to enrollees on or after July 1, 2012. This notice may be provided separately from the first plan document, so long as it is sent prior to or concurrent with the first plan document. The guidance explains that a “plan document” for these purposes “can be considered a document pertaining to the plan or policy that is distributed to all policyholders in individual and group markets and all subscribers in group markets.” Examples include policies, summary plan descriptions, benefits summaries, and group contracts.

More information on the MLR requirement can be found here.

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