Agencies Invite Public To Share Input About Insurer Obligation To Report About Health Premium Use Under Health Care Reform Law

April 15, 2010

By Cynthia Marcotte Stamer

The Departments of Treasury (IRS), Labor (DOL) and Health & Human Services (HHS) are inviting public comments in advance of future rulemaking on impending new federal requirements that will obligate health insurance issuers offering individual or group medical coverage to send annual reports to HHS on the percentages of premiums that the coverage spends on  reimbursement for clinical services and activities that improve health  care quality, and to provide rebates to enrollees if this spending does  not meet minimum standards for a given plan year added as Section 2718  of the Public Health Service Act (PHS Act) by the Patient Protection and Affordable Care Act  (PPACA), Public Law 111-148, enacted on March 23, 2010. 

Among other things, the new requirements in Section 2718 of  the PHS Act, Section 715 of the Employee Retirement Income Security Act  of 1974 (ERISA) and Section 9815 of the Internal Revenue Code of 1986  (the Code) will require  health  insurance issuers offering group or individual  coverage to report to HHS annually:

  • The ratio of the incurred loss (or incurred claims) plus the  loss adjustment expense (or change in contract reserves) to earned  premiums (also known as the medical loss ratio (MLR)); and
  • The percentage of total premium revenue–after accounting for collections or receipts for risk  adjustment and risk corridors and payments of reinsurance–that the  coverage spends: (1) on reimbursement for clinical services provided to enrollees; (2) for activities that improve health care quality;  and (3) on all other non-claims costs, including an explanation of the nature of these costs, and excluding Federal and State taxes and  licensing or regulatory fees.

PPACA also requires that HHS make these reports available to the public on the Internet Web site of HHS.  To review the request for comments and its instructions for commenting on the new requirements, see here.

For Added Information or Assistance

If your organization need advice or help with these or other health benefit, labor and employment, employee benefits, compensation or related matters, consider contacting Cynthia Marcotte Stamer at (469) 767-8872 or via e-mail here

Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, Chair of the American Bar Association (ABA) Real Property, Probate & Trust Section Employee Benefits & Other Compensation Arrangements Group, a Council Member of the ABA Joint Committee On Employee Benefits Council, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, Vice President of the North Texas Health Care Compliance Professionals Association, and Exempt Organization Vice-Coordinator of the Southern States IRS TEGE Council,  , Ms. Stamer has extensive experience advising and representing management about labor and employment, employee benefits, compensation and other related management matters.  A nationally recognized author and lecturer, Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.

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 ©2010 Cynthia Marcotte Stamer. All rights reserved.

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