The CMS on Tuesday granted the state of Georgia some leeway in implementing the healthcare reform law's medical-loss-ratio standard for 2011 through 2013.
Ga. wins some flexibility on medical-loss ratio
Georgia's Insurance Department had requested an adjustment of the medical-loss-ratio standard—which requires insurance companies to spend at least 80% of premium dollars on medical expenses—so that companies in the state would be permitted instead to spend 65% on premiums in 2011, 70% in 2012, and 75% in 2015. In its decision, the CMS determined that applying the full 80% standard in 2011 may lead to destabilization of the individual market in Georgia, but not to the degree that would warrant the standards that the state insurance department requested.
“Consequently, we have determined that the MLR standard in Georgia shall be adjusted to 70% in 2011 and 75% in 2012, with the statutory standard of 80% to apply beginning in 2013,” Steven Larsen, deputy administrator and director of the CMS' Center for Consumer Information and Insurance Oversight (CCIIO), wrote in a 14-page letter to Ralph Hudgens (PDF), Georgia's insurance commissioner.
According to the CMS, 12 of the 18 largest issuers in Georgia's individual market had medical-loss-ratios above 65% in 2010. But the 80% standard would still have a negative effect on several other issuers, because the state does not have a guaranteed issue requirement, limits on health-status rating, an issuer of last resort, or a high-risk pool. This would make it hard for policyholders to find replacement coverage immediately. “There are some states that have MLR standards to begin with,” Larsen said on a call with reporters Tuesday. “There has been no standard in place at all in the state so many companies are starting at ground zero on this,” he added, referring to Georgia.
To date, CCIIO has denied North Dakota and Delaware's requests for medical-loss-ratio adjustments; granted Maine's full request; and made adjustments to the requests from New Hampshire, Nevada, Kentucky and Iowa. Meanwhile, Florida, Indiana, Louisiana and Michigan have completed applications, while applications from Kansas, North Carolina, Oklahoma and Texas are undergoing a review for completeness.
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