HHS unveiled sample notices that health plans must send policyholders beginning this summer to explain how their premiums are spent and informing them when rebates are owed because too little was spent on healthcare services.
Notices detail how premiums are spent
The notifications—required by the Patient Protection and Affordable Care Act—will detail what percentages of premiums go toward various activities, such as underwriting.
“They are among the most important consumer protections in the Affordable Care Act because they provide more transparency to consumers and also make sure that consumers get value from their premium dollars,” Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the CMS, said during a call with reporters.
HHS is adding a requirement that the notification include whether the plan met federal standards on the minimum percentage that those plans must devote to delivering healthcare services or activities that qualify as “quality improvement.”
The law requires insurance companies in the individual and small group markets to spend at least 80% of the premium dollars—beginning in 2011—on medical care and quality improvement. Insurance companies in the large group market must spend at least 85% on such activities. Plans must provide rebates beginning by Aug. 1 if they do not meet those minimums.
Separately, the total number of rejected state waivers from the MLR standard rose to 10, and the number approved or partially approved rose to seven. HHS denied a waiver sought by Wisconsin and approved a narrower version of North Carolina's request.
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