Providers weigh in on medical-loss ratio

In public comments to HHS, two powerful provider groups have weighed in on how insurers should be able to spend member premium dollars under the health reform law.

The American Hospital Association wrote that only payments to licensed medical professionals or entities for healthcare services should be classified as “reimbursement for medical services,” under the forthcoming rules, and that what qualifies as quality-improvement activities should be determined using a “decision-tree analysis.”

“A decision-tree analysis might incorporate a series of questions that probes whether the activity is aimed at reducing cost, utilization, or directs the patient to a lower cost care setting versus whether the activity measurably improves the patient's health,” the AHA wrote.

Under the health reform law, starting in 2011, health insurers must spend at least 85% of subscriber premiums on medical costs in group coverage plans, and at least 80% in individual plans. Quality-improvement activities can be included in this calculation. Public comment on this so-called medical-loss ratio rule closes today.

Meanwhile, the Medical Group Management Association wrote in its comments that HHS should include administrative costs incurred by providers as a component of insurers' administrative costs in defining medical loss ratios. “These unnecessary administrative costs deprive practices, and ultimately patients, of resources that should be allocated towards patient care,” said William Jessee, president and CEO of MGMA, in a statement.

The National Association of Insurance Commissioners is expected to issue definitions on medical-loss ratios to HHS on June 1.