Anthem Blue Cross of California will be notifying certain small employer groups that they will be receiving a rebate under the Affordable Care Acts’s Medical Loss Ratio (MLR). Under the MLR provision, the health insurance company must spend 80% of premiums on patient care and quality improvement. If they spend less than that amount they must rebate the difference back to the employer group.
Anthem Blue Cross only misses one target
On the upside, Blue Cross met the medical loss ratios for individual, small group and large group plans that are regulated by the California Department of Insurance and individual and large group plans regulated by the California Department of Managed Health Care (DMHC). They missed the 80/20 target for small group plans overseen by DMHC. These plans consist of Health Maintenance Organizations (HMOs) that are overseen by DMHC.
If your small employer group sponsors an Anthem Blue Cross HMO plan, they might be receiving a notice of an impending rebate credit.
Small employer groups are challenging
The efficient and effective management of small employer groups is particularly difficult for insurers relative to the other plan types. Generally, small groups have lower enrollment and the guarantee-issue nature of the plans means there is usually a higher proportion of people needing medical care. Some of the inequities may be balanced out when the ACA is fully implemented in 2014 taking some of the pressure off the small employer groups as enrollment expands in the groups or they are disbanded in favor of people getting health insurance through the state exchanges.
ACA MLR is working
Either way, the the MLR provision seems to be working for the members. Health insurance companies are finding ways to trim administrative costs to meet the ratio while staying profitable or making the necessary margins. Here is the complete text of the announcement –
Anthem files report on medical loss ratio rebates for California
June 4, 2013
Small group market rebates only
The Affordable Care Act (health care reform law) requires health plans to meet a minimum medical loss ratio, which varies according to market. Health insurance issuers must meet a minimum medical loss ratio of 85% in the fully insured large group market and 80% in the fully insured small group and individual markets.
The health care reform law also requires health plans to file a medical loss ratio report each year with the Department of Health and Human Services. On June 1, 2013, we filed the required medical loss ratio report for the 2012 calendar year.
We met the required loss ratio in the large group, small group, and individual markets for the California Department of Insurance (CDI). Additionally, the large group and individual markets for the Department of Managed Health Care (DMHC) met the required loss ratio, but the small group market for the DMHC did not.
Rebate Check and Notification Schedule for California Small Groups
To make sure our small group customers understand why they’re receiving rebate checks, who receives them and when the checks will be sent, we are sending pre-rebate notifications to impacted group employers and Cal-Cobra members in the near future. Attached is a sample of the small group employer letter that is being mailed. An enrollee report is also being created to assist in determine which enrollees are eligible for the rebate. All rebate checks and notices will be sent before August 1, 2013.
Employers receiving rebates can use the rebates to:
- Lower future premium rates or
- Give each 2012 enrollee a portion of the rebate amount
As a reminder, medical loss ratio requirements do not apply in the ASO market and short-term medical insurance is excluded from rebates.