Final Medical Loss Ratio Rule Rebuffs Lobbying By Insurance Brokers

 

Final Medical Loss Ratio Rule Rebuffs Lobbying By Insurance Brokers

Monday, December 5th, 2011 - 11:19
Monday, December 5, 2011 - 11:09
The Obama administration has issued a final rule establishing regulations for medical loss ratios. It rebuffed an attempt by the insurance industry to have broker fees not be counted as administrative expenses.

The Obama administration has issued a stringent rule to regulate the implementation of medical loss ratios, which are requirements that insurance companies spend set percentages of their premium income on medical care, as opposed to administrative expenses.

Brokers and insurance companies had lobbied hard since the MLR proposed rule was issued about a year ago for broker fees to be counted as medical care and not administrative expenses. Counting them as medical care would make it easier for insurance companies to meet the minimum requirement that 80 percent of their premium income be spent on medical care.

But the Obama administration did not change the rule, and broker fees will be counted as administrative expenses, according to a blog post by Kaiser Health News. Some insurance companies argue that the rule interpretation will force them to lay off brokers, which could make it harder for consumers to find the right insurance coverage.

If insurance companies do not meet the MLR, they will have to provide rebates to consumers.