Local and Other News

New Medical Loss Ratio Activity

March 23, 2012

As the first quarter of 2012 comes to an end, more activities related to the Medical Loss Ratio (MLR) provision of the Affordable Care Act (the Act) will occur. 

Foremost among these is the April 1 filing of a Supplemental Health Care Exhibit (SHCE) with the National Association of Insurance Commissioners (NAIC) to assist state regulators in identifying and defining elements that make up MLR.  The SHCE also tracks and compares enrollment and financial results of insurance companies.  This exhibit has been approved by NAIC for reporting each state where a health insurance entity writes business. 

The filing is likely to prompt speculation in the health insurance market and news media about the states in which health insurance companies may not meet the MLR thresholds established in the Act because the data will be available from NAIC.  While the filing will provide some information related to future federal MLR rebates, the SHCE and federal MLR rebate forms are different. Consequently, the SHCE filing cannot be used as an exact match of future federal MLR rebate payments. 

Clients Notified
In early April, we will mail letters concerning MLR to two groups of customers: 

A separate mailing is going to employers that are non-ERISA and non-government entities (such as churches and tribal groups) and may also be eligible for a rebate. This mailing will request that these employers provide written assurance that a certain portion of any potential MLR rebate paid to them will be used for the benefit of their subscribers.

The failure by these groups to provide such assurance will result in the entire amount of any potential rebate applicable to these policies being paid directly to their subscribers. 

Another April mailing goes to groups that had active fully insured policies during 2011, but are no longer active with UnitedHealthcare in 2012 for one reason or another and may be eligible for a rebate. They will be asked to confirm their correct contact information for the month of July 2012, which is needed in the event they are eligible for a rebate. 

UnitedHealthcare will be legally required by the U.S. Department of Health and Human Services (HHS) to pay the entire amount of any owed rebate directly to the subscribers of any terminated groups that cannot be located. 

In order to determine MLR, policyholders are grouped by state, size and insurance entity into aggregation sets.  The calculation is done on a calendar year basis for each set by dividing the amount spent on medical claims and quality improvement programs by premium dollars collected less certain taxes and fees. 

MLR is based on the total experience of the aggregation set and not just the specific experience of individual and group policyholders.  UnitedHealthcare anticipates having a list of eligible aggregation sets identified in May and the final list of eligible customers in June, with rebate checks beginning to mail in July.

For more information, please contact your UnitedHealthcare representative.

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