HHS Issues Final Rule Addressing Issues Related to Affordable Care Act’s Medical Loss Ratio Requirements

The Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) has issued a final rule (pdf) regarding certain issues associated with the Affordable Care Act’s medical loss ratio (MLR) requirements. The new health care law mandates that health insurers, depending on the size of the insurance market, spend between 80 and 85% of premium revenue on reimbursement for clinical services or activities that improve health care quality, or provide a rebate to their enrollees starting in 2012. The agency issued interim final regulations on the MLR requirement last November. The new final rule specifically addresses the treatment of “mini-med” and expatriate policies; rules governing how ICD-10 conversion costs, fraud reduction expenses, and community benefit expenditures are accounted for; and rules regarding the distribution of rebates in group markets.

Notably, with respect to the distribution of rebates to enrollees, the final rule establishes separate standards for ERISA-covered group health plans. The Department of Labor generally has jurisdiction to oversee the distribution of rebates under employee benefit plans covered under Title I of ERISA. Thus, to the extent MLR rebates constitute plan assets of an ERISA-covered group health plan, “decisions regarding the handling and allocation of the rebate would have to be made by a plan fiduciary consistent with ERISA.” To this end, the DOL has published guidance regarding the duties of employers/plan sponsors and other fiduciaries responsible under sections 403, 404 and 406 of ERISA for decisions relating to MLR rebates.

The agency is accepting comments on specific issues outlined in the rule, including those related to the process for providing rebates to group enrollees and reporting of rebates that are received. Such comments must be received by January 6, 2012, and reference the file code CMS-9998-FC. Comments may be submitted electronically through the federal eRulemaking portal or sent by regulator mail to: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9998-FC, P.O. Box 8010, Baltimore, MD 21244-8010; by overnight or express mail to: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9998-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850; or by hand-delivery to Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, S.W., Washington, DC 20201 or the aforementioned Baltimore location.

For more information on this rule and related guidance, see Littler's ASAP: HHS Issues Final Rule Addressing Matters Related to Affordable Care Act's Medical Loss Ratio Requirements; DOL Issues Guidance on Rebates for Group Health Plans.

Photo credit:  Bartek Szewczyk