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Feds May Be Pushing Minimum Medical Loss Ratio Consistency Across All Lines of Business

A federal response to the Florida Medicaid agency’s new 1115 waiver request shows that the Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services (HHS) are moving toward a uniform minimum medical loss ration (MLR) standard for the nations’s healthcare system.

As first reported in The Florida Current, CMS told the state Agency for Health Care Administration (AHCA) recently that it wants to see an 85 percent minimum MLR as part of the new waiver Florida is requesting for its Medicaid program. Under the Patient Protection and Affordable Care Act (PPACA), Medicare Advantage plans will be required to hit an 85 percent MLR or rebate additional dollars back to CMS. Under PPACA, grandfathered and non-grandfathered commercial health plans must meet minimum MLRs too or rebate money back to employers and individuals. The large group standard is set at 85 percent and the small group and individual standard is set at 80 percent, although temporary waivers have been granted to the latter lines of business due to concerns surrounding availability of insurance in various states.

On the advice of the National Association of Insurance Commissioners (NAIC), HHS wisely adopted a fairly flexible method for calculating the MLRs for the commercial world, including allowing certain “good administrative spend” (for example, spending on true case, disease and quality management) to count toward the MLR calculation. It is anticipated that a similar standard will be adopted by CMS for MA plans. This gives some relief to insurers, although the standards are still tough and could lead to erosion of availability of certain products.

Many states already include minimum MLRs in their Medicaid managed care contracts, but this is the first sign that CMS may be pushing a national standard for Medicaid managed care, thereby tying Medicaid to the overall national health reform. HHS has already signaled its intent to begin migrating other PPACA reforms into the Medicaid world, including introduction of Accountable Care Organizations (ACOs) and certain other savings programs. And the Exchange section of PPACA anticipates major integration with Medicaid and the State Children’s Health Insurance Program (SCHIP) as well.

Current Florida law for the new Medicaid reform plan does not call for a pure minimum MLR; it envisions a tiered shared rebate back to the state depending on actual return to the plan. Many argue that this is a better method to monitor plan medical service outlays; it encourages plans to control costs and at the same time render appropriate care rather than having plans simply spending to meet the minimum MLR benchmark. Whether this approach will satisfy CMS is yet to be seen. If not, given the amount of money at stake for Florida, including its entire Low Income Pool (LIP) for hospital funding, AHCA may have little leverage on this issue.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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