Carefirst to Distribute Medical Loss Ratio (MLR) Rebates

According to Carefirst, under the Affordable Care Act (ACA), all health insurers must spend a minimum percentage of the premiums they collect on health care services and quality improvement activities for their members. This percentage is called the Medical Loss Ratio (MLR) and is calculated for an insurer’s overall business based on the market segments in each state (not at the group level).

Generally, insurers must spend at least 80 cents of every premium dollar they receive on health care services. If the minimum MLR is not met within a market, insurers are required to pay a rebate to customers within that market segment. These rebate checks must be received by September 30, 2016.

Employers or administrators of a group health plan, including plans offered by non-governmental employers subject to the Employee Retirement Income Security Act of 1974 (ERISA), may have fiduciary responsibilities regarding use of the MLR rebates. Some or all of an MLR rebate may be an asset of the plan which must be used for the benefit of employees covered by the policy. As a general summary, for group health plans that are employer plans governed by ERISA or that are state or local governmental plans, an employer must distribute the rebate in one of three ways: 

1. Reduce employees’ portion of premium for the upcoming year for subscribers covered under any option offered by the health plan at the time the rebate is received;
2. Reduce employees’ portion of premium for the upcoming year for subscribers covered under the option offered by the health plan to which the rebate applies at the time the rebate is received; 
3. Provide a cash rebate to employees or subscribers that were covered by the health insurance on which the rebate is based.                                                    

CareFirst, however, cannot provide legal advice regarding an employer’s obligations, and individual groups should consult with their legal or benefits advisors in light of their specific circumstances. Employers also may consult the Department of Labor’s guidance for group health plans subject to ERISA in Technical Release 2011-04, available at http://www.dol.gov/ebsa/newsroom, the guidance for State or local governmental plans at 45 C.F.R. § 158.242, or, for general information, the Department of Labor’s Employee Benefits Security Administration at 1-866-444-EBSA (3272).      

                       

HEALTH REFORM (PPACA) COMPLIANCE....SAVE THE DATE!!

So here we are, on the heels of a presidential election, a bit over a year away from the full effects of the Affordable Care Act (Health Reform) and employers need to make sure they are remaining compliant or it could cost, a lot.  Below is a time-line and essential changes that you may want to earmark.  In past posts I have shared these with you but thought were important enough for a re-visit.

2012

1)  August, 2012-Rebates will be issued by insurers if medical loss ratio is less than 80% in small group market and 85% in large group market.  Rebates will be issued at the employer level.  

2)  August, 2012-Non-Grandfathered Health plans will be required to offer coverage for Gestational Diabetes Screening and Contraceptive for non-religious, non-exempt employers.

3) Summary of Benefits Coverage (SBC)-Applies to first Open Enrollment period after September 23, 2012.  Insurers and Plan Administrators must provide a summary of benefits and coverage to employers and plan participants.  For employer groups the responsibility to get these to the employees relies primarily on the employer.  Under this provision, there is a 60 Day Advance Notice of Material Change where carriers must provide a 60 day advance notification if any material changes to the coverage are to go into effect.

4)  October, 2012-Comparative Effectiveness Fee-Plans that began after 10-2-2011 will be required to pay $1 per covered life for research to determine effectiveness of medical treatments. This is the portion of the law that concerned a great many people as they believed that these panels would undermine life saving care in place of cost savings.  This fee goes up to $2 per life in 2013 and supposedly goes away in 2019.


5)  Jan, 2013-Flexible Spending Account (FSA) spending limits capped at $2500 for Individual and $5000 for family.  Cap applies to plan years that began after December 31, 2012.

6) 2012 Tax Year-W-2's distributed in 2013 for tax year 2012 for employers who issue more than 250 W-2's will be required to include the total cost of group medical coverage.  

PPACA-CAREFIRST TO ISSUE MEDICAL LOSS RATIO (MLR) REBATES

PLEASE SEE BELOW FROM CAREFIRST:

The Affordable Care Act requires CareFirst to rebate part of the premiums it received if it does not spend at least 80 percent of the premiums CareFirst receives on health care services, such as doctors and hospital bills, and activities to improve health care quality, such as efforts to improve patient safety. No more than 20 percent of premiums may be spent on administrative costs such as salaries, sales and advertising. This is referred to as the “Medical Loss Ratio” standard or the 80/20 rule. The 80/20 rule in the Affordable Care Act is intended to ensure that consumers get value for their health care dollars. You can learn more about the

80 /20 rule and other provisions of the health reform law at: http://www.healthcare.gov/law/features/costs/value-for-premium/index.html.

What the Medical Loss Ratio Rule Means to You

The Medical Loss Ratio rule is calculated on a State by State basis. In the District of Columbia,  CareFirst did not meet the 80/20 standard. In Virginia the Small and Large Group HMO plans did not meet the 80/20 Standard and in Maryland the Individual Consumer-Driven Only Market was affected.   In 2011, CareFirst spent only 79.2%of a total of $1,000,000 in premium dollars on health care and activities to improve health care quality. Since it missed the 80 percent target by .8% of premium it receives, CareFirst must rebate .8% of the total health insurance premiums paid by the employer and employees in your group health plan. We are required to send this rebate by August 1, 2012, or apply this rebate to the health insurance premium that is due on or after August 1, 2012. Employers or group policyholders must follow certain rules for distributing the rebate.

Ways in Which an Employer Can Distribute the Rebate

If your group health plan is a non-Federal governmental plan, the employer or group policyholder must distribute the rebate in one of two ways: Directed to: Small Groups Platform: Facets

• Reducing premium for the upcoming year; or

• Providing a cash rebate to employees or subscribers that were covered by the health insurance on which the rebate is based. 

Beginning July 9, 2012, CareFirst will distribute rebate checks to 9,870 fully insured employer groups for the 2011 calendar year.

• Rebates differ by product and jurisdiction. The typical group will receive a rebate check between $561 and $10,785.

PPACA-HEALTH REFORM UPDATE

As we all wait for the Supreme Court to rule on the future of health reform, there are items in the law that will be taking place in the near future.  Below is a listing of those items:


1)  August, 2012-Rebates will be issued by insurers if medical loss ratio is less than 80% in small group market and 85% in large group market.  Rebates will be issued at the employer level.  


2)  August, 2012-Non-Grandfathered Health plans will be required to offer coverage for Gestational Diabetes Screening and Contraceptive for non-religious, non-exempt employers.
(I  am thinking that most carriers will offer this coverage as its easier for them to manage than trying to determine Grandfathered and Non-Grandfathered eligibility)


3)  Plan years beginning after September 23, 2012-Summary of Benefits will need to be updated to include more easily readable and understandable benefit descriptions.  This responsibility will fall mainly on insurers for fully insured plans.


4)  October, 2012-Comparative Effectiveness Fee-Plans that began after 10-2-2011 will be required to pay $1 per covered life for research to determine effectiveness of medical treatments. This is the portion of the law that concerned a great many people as they believed that these panels would undermine life saving care in place of cost savings.  This fee goes up to $2 per life in 2013 and supposedly goes away in 2019.


5)  Jan, 2013-Flexible Spending Account (FSA) spending limits capped at $2500 for Individual and $5000 for family.  Cap applies to plan years that began after December 31, 2012.


6) 2012 Tax Year-W-2's distributed in 2013 for tax year 2012 for employers who issue more than 250 W-2's will be required to include the total cost of group medical coverage.