Academy Activities

The Academy's Medical Loss Ratio Regulation Work Group sent a letter to the National Association of Insurance Commissioners (NAIC) on Oct. 8 identifying areas of agreement with the NAIC Health Insurance and Managed Care (B) Committee's draft regulation on the calculation methodology for medical loss ratio (MLR) rebates. The letter also addressed issues that deserved further consideration (e.g., magnitude of credibility adjustments and methodologies for contract reserves) or still needed to be addressed (e.g., transition guidance and identification of rebate recipients).

Legislative and Regulatory Updates

The NAIC's model regulation outlining the definitions and methodologies for calculating MLR was approved by a joint session of the Executive Committee and Plenary at the NAIC fall meeting in Orlando on Oct. 21. The NAIC will forward the model regulation to the Department of Health and Human Services (HHS) for certification. Several amendments were presented and withdrawn by regulators during the meeting, including amendments relating to aggregation and agent commissions. Another amendment—regarding credibility adjustments—failed by a 19-34 margin, with one abstention. According to a report in Politico, Kansas Insurance Commissioner Sandy Praeger indicated that next year the NAIC could suggest changes regarding credibility adjustments to HHS. See the "In the News" section below for more details.

The Exchanges (B) Subgroup of the NAIC's Health Insurance and Managed Care (B) Committee met on Oct. 20 to discuss the draft American Health Benefit Exchange Model Act. The draft model will be revised based on comments received, and the subgroup will convene a conference call to discuss the revised version. If approved by the subgroup, the revised draft will be forwarded to the full "B" Committee for its consideration.

HHS has updated the Frequently Asked Questions (FAQ) section of its website to address the implementation of the ACA. The FAQs address grandfathered health plans, dental and vision benefits, rescissions, preventive health services, and the exemption for group health plans with fewer than two current employees. They also clarify the policy year and effective date in the ACA for individual health insurance policies.

In The News/Media Activities

The Academy Medical Loss Ratio (MLR) Regulation Work Group's Oct. 8 letter to regulators regarding the NAIC's exposure draft of a regulation for MLR rebates was cited and linked by Kaiser Health News on Oct. 21. The work group wrote that, "Increasing the magnitude of the credibility adjustments may help keep insurance markets attractive to smaller competitors, which would enhance consumer choice."

Tom Keller, a member of the work group, was quoted by Politico's Pulse (click "Read the Whole Post") on Oct. 18 regarding the same issue. Keller said the work group is uncomfortable with the confidence interval being set at the 50th percentile level. He said the work group would like to see a higher confidence interval, but that the group has not specified what that percentile should be.

The work group did illustrate a 90th percentile level in its May 12 letter to regulators, but it said it was not endorsing that confidence interval. The work group's efforts were explained in more detail by "The Insurance Bellwether" blog on Oct. 14.

Academy Benefit and Eligibility Changes Work Group Chairperson Karen Bender was quoted by National Underwriter Life & Health on Sept. 27 from the work group's Aug. 27 letter to HHS commenting on interim final regulations regarding the elimination of preexisting condition exclusions, the elimination of lifetime limits and restrictions on annual limits, and other patient protections. "The combination of preexisting and guaranteed-issue rules may encourage a financially prudent family with healthy children to defer purchase of insurance until a child gets sick. As long as there is at least one carrier with an open-enrollment period available at any time during the year, and no penalty for deferral, then there is an economic incentive to defer purchase of insurance," Bender wrote.

News links are to external websites. The Academy is not responsible for the content of these websites.