Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Medical Loss Ratio Rule Undergoing Final Review Before Publication

By Rebecca Adams, CQ HealthBeat Associate Editor

November 10, 2011 -- The Office of Management and Budget is reviewing a final rule for medical loss ratios that should give some guidance as to how the so-called mini-med limited benefit plans will be allowed to operate.

A review led by OMB officials is the last step before regulations are published in the Federal Register.

The final rule will build on information that HHS officials released almost a year ago, when they released an interim final rule. The regulation requires insurers in the individual and small-group markets to spend at least 80 percent of premiums on health care services and quality improvement. Insurers in the large group market must spend at least 85 percent on such costs rather than administrative expenses. The interim final rule implementing MLR requirements was published Dec. 1, 2010, and tweaked on Dec. 30, 2010.

Health industry lobbyists don't expect major changes for most plans in the final rule.

But one thing that the final rule is expected to change is the way that limited benefit plans such as mini-med plans work going forward.

Last year's interim final rule had a provision affecting mini-med and expatriate plans in 2011 so that insurers and employers would have time to adjust to the new requirements under the medical loss ratio rule.

Mini-med and expatriate policies offer limited coverage that would ordinarily run afoul of the new rules. But employers said that they offered them because the modest coverage was better than nothing.

Obama administration officials were persuaded to temporarily adjust the way that the administrative verses benefit spending of these plans were considered under the MLR requirements. Under a waiver process, HHS officials have allowed existing mini-med plans to continue in the short term.

Under last year's interim final rule, insurers were supposed to report data about the mini-meds' expenses and profits to HHS officials early in the year so that the administration would have better information about them before publishing a final medical loss ratio rule. The changes to the MLR formula that allowed mini-med plans to continue were supposed to apply only for 2011.

Rules are often, although not always, published within a week after OMB officials receive them. Sometimes the review process moves more quickly and sometimes, as was seen earlier this year with a proposed Medicare rule on accountable care organizations, OMB officials work on a rule for more than a month. OMB employees make sure that regulations comply with an administration's overall objectives and that any protests from officials at another agencies are addressed.

Publication Details