Healthcare Business News

Maine insurers get medical-loss leeway

By Rebecca Vesely
Posted: March 8, 2011 - 5:00 pm ET

Maine has been granted a three-year reprieve on a federal requirement that 80% of individual policyholders' premium dollars be spent on direct medical costs.

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Maine is the first state to receive HHS permission to forgo this rule. Insurers in the state must instead meet a lower threshold of spending at least 65% of member premiums on direct medical costs.

The adjustment applies to the individual insurance market only, representing nearly 37,000 Maine residents.

Under the federal healthcare reform law, insurers starting this year must spend 80% of member premium dollars on direct medical care and quality improvement activities for individual policyholders. Insurers that don't comply must issue rebates for the difference starting in 2012.

But the reform law allows the HHS secretary to adjust this standard in states where compliance could destabilize the market. In Maine, one of three insurers offering individual coverage, MEGA Life and Health, had threatened to pull out if this 80% minimum loss ratio went into effect. MEGA has about 14,000 individual members, representing 37% of the market.

New Hampshire, Nevada and Kentucky have similar requests pending with HHS.

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