Required Medicaid medical-loss ratio will not hurt insurers

A new rule that sets a minimum loss ratio for Medicaid managed care plans will not hurt provider reimbursements, but may still be an inconvenience, experts say.

Beginning in 2017, Medicaid managed care plans would be required to have a medical loss ratio of at least 85%, meaning most of their revenue will be spent on medical care, the Centers for Medicare & Medicaid Services announced on May 26. The remaining 15% can go towards administrative costs and fraud prevention.

The MLR provision was not a secret, as most plans are already in compliance, according to Mandy Pellegrin, a legislative analyst at Obsidian Research Group in Nashville. An MLR is present in every market, and the proposed rule is subtle enough so insurers will not be greatly impacted, she told Bloomberg news services.

Medicaid and CHIP are the only health benefit coverage programs that do not require a minimum MLR for managed care plans, CMS noted. Currently, the Affordable Care Act requires a minimum MLR of 80% for individual policies and 85% for large group market plans. Medicare Advantage has an 85% requirement.

This is the first major update the programs have seen in more than a decade, and the goal is to “ensure that program dollars are being spent on health care services, covered benefits and quality improvement efforts rather than on potentially unnecessary administrative activities.”

Comments can be submitted online or by mail. The deadline for comments is July 27.