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What new reporting rules mean for your area’s health insurers

More effects of health care reform are rolling into the marketplace – the latest in the form of new spending guidelines for health care insurers.

 

Doctors in surgery

Photo by Flickr user SarahMcD

 

As this Washington Post article: Health insurers face new federal rules on medical spending, explains, insurers starting next year must toe to new standards for the percentage of premiums spent on medical care vs. overhead.  And in the process, they’ll be required to make public a whole new array of financial and accounting numbers.

Currently some insurers spend a third or more of premiums on administrative costs; new rules developed in conjunction with the National Association of Insurance Commissioners – the state-level regulators – require at least $4 out of $5 be spent on medical costs.

If they don’t comply, insurers could be required to hand out millions of dollars in rebates to millions of consumers  – though as this TampaBay.com article points out, the industry is wasting no time asking for exemptions to that rule.

Here’s the U.S. Department of Health and Human Services primer on medical-loss ratios, at the Healthcare.gov site.   And here’s the official press release on the new rules.

And this blog post by Andrew Van Dam at the website of the Association of Health Care Journalists (a gold mine of story ideas and reporting resources for you, by the way) offers a coherent explanation of the medical-loss ratio.  He also notes that holding every subsidiary in huge multilayered insurers to the new rules could result in some subsidiaries dropping coverage in high-risk areas; this would be a key angle to pursue on a regional basis.

This Kaiser Health News entry outlines some other issues, including how insurers can define “medical spending.” Some want to include administrative and marketing costs. Federal taxes are another issue, as are potential exemptions for low-premium, bare-bones plans.

Health care reformThis Reuters article reprinted on an industry site outlines other possible exemptions; you can start digging to find out which insurers or plans in your market might qualify for them.

One constituency that’s concerned about the new medical-loss ratios is insurance brokers; they fear commissions will be cut to keep costs down, and as this industry report points out, are considering asking Congress to exempt their fees and commissions from the ratios.   Be worth a check with agencies in your area that deal in group plans.

Right now it’s unclear what the best story angles are; you’ll want to start with a basic explainer and reaction piece to get readers up to speed.  You may be able to get current examples of insurers’ medical-loss data from your state’s commissioner.  This document, which was part of the Dept. of Health and Human Services now-expired public comments process on the new rules, is a trove of explicit questions you can ask of regulators and insurers as you educate yourself about the ins and outs of health-insurer accounting.

Speaking of health insurers’ financials, take a look at this this Detroit Free Press report from Nov. 23 that highlights lawsuits against Blue Cross Blue Shield of Michigan, the state’s largest insurer and the insurer of last resort (by state law) for people who can’t get coverage anywhere else.  As the Free Press points out, BCBS of Michigan is accused in a variety of lawsuits of taking kick backs from local governments in exchange for contracts to administer their health plans.

Be worth checking court dockets for anything similar in your market.

About the Author

Veteran financial writer Melissa Preddy served as a business writer, editor and columnist for The Detroit News from 1995 to 2008, is a Michigan-based freelance journalist. She now works as a writer and editor for a medical research unit of the University of Michigan Medical School. Follow her daily posts. | E-mail: Melissa Preddy

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