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Health care industry

CMS Finalizes Medical Loss Ratio Regulations to Protect Consumers

Strategic Insights

— 2 min read

Massachusetts Rep. John Tierney played a key role in securing the medical loss ratio (MLR) requirements in the Patient Protection and Affordable Care Act, which hold health insurers accountable for delivering high-quality healthcare to their customers rather than excessive administrative costs. The regulations will require health insurers to spend at least 80% of individual and small group plan premiums on medical claims or quality improvements, and at least 85% of large group premiums. This will provide protection and value to approximately 74.8 million insured Americans, with estimates suggesting up to 9 million Americans could receive rebates worth $600 million to $1.4 billion starting in 2012.

Key Takeaways:

  • Congressman John Tierney successfully led the effort to include the MLR requirements in the Patient Protection and Affordable Care Act.
  • The regulations require health insurers to spend at least 80% of individual and small group plan premiums on medical claims or quality improvements, and at least 85% of large group premiums.
  • Approximately 74.8 million insured Americans will benefit from the regulations, which provide protection and value to consumers.
  • Health plans that do not meet the ratios must refund the difference to policyholders beginning in 2012.
  • Up to 9 million Americans could receive rebates worth $600 million to $1.4 billion starting in 2012.
  • The regulations take effect on January 1, 2012.
  • Last year's estimates indicate that the rebates will have a significant impact on consumers, with a range of $600 million to $1.4 billion.

Statistics:

  • 74.8 million: approximate number of insured Americans who will benefit from the regulations.
  • 80%: minimum percentage of individual and small group plan premiums that must be spent on medical claims or quality improvements.
  • 85%: minimum percentage of large group premiums that must be spent on medical claims or quality improvements.
  • $600 million to $1.4 billion: estimated value of rebates that up to 9 million Americans could receive starting in 2012.
  • 9 million: estimated number of Americans who could receive rebates worth $600 million to $1.4 billion starting in 2012.
  • January 1, 2012: effective date of the regulations.

Sources:

  • "Centers for Medicare and Medicaid Services (CMS) issu ed final regulations on the medical loss ratio (MLR) requirements that Congressman John Tierney secured in the Patient Protection and Affordable Care Act." [1]
  • "Congressman Tierney successfully led the effort to include the MLR requirements in the Patient Protection and Affordable Care Act." [1]
  • "The regulations provide protection and value to approximately 74.8 million insured Americans by requiring health insurers to spend at least 80 percent of individual and small group plan premiums on medical claims or quality improvements rather than administrative costs, and at least 85 percent of large group premiums." [1]
  • "Health plans that do not meet the ratios must refund the difference to policyholders beginning in 2012." [1]
  • "Estimates from last year indicate that, starting in 2012, up to 9 million Americans could receive rebates worth $600 million to $1.4 billion." [1]
  • "The rule takes effect Jan. 1, 2012." [1]

[1] Release from the office of Massachusetts Rep. John Tierney, WASHINGTON.

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