HHS: MLR will consider special circumstances of mini-meds

The Department of Health and Human Services issued a statement last week, saying the agency will exercise the discretion of Secretary Kathleen Sebelius under new health reform law to address the special circumstances of limited benefit plans in medical loss ratio calculations.

Federal MLR requirements have not officially been issued, and recommendations from the National Association of Insurance Commissioners are due by Dec 31.

The MLR guidance issue is of great concern to companies employing a high proportion of part-time, seasonal and temporary workers who are enrolled in limited medical benefit (mini-med) plans because they are ineligible for coverage under their employer's regular group health care plan. Most of these mini-med plans don't meet a 2011 requirement that they spend 80 percent to 85 percent of premiums on medical benefits instead of administration expenses.

The Wall Street Journal reports McDonald's, for example, warned federal regulators it could drop its health insurance plan for nearly 30,000 restaurant workers "unless regulators waive a new requirement of the health overhaul."

Meanwhile, the National Restaurant Association issued a letter to the Office of Consumer Information and Insurance Oversight (OCIIO) last week, asking that restaurants be allowed to continue offering these mini-med plans to the 1.4 million workers that are enrolled in them until 2014, when other options can become available to them.

"Until 2014, these workers would not be able to either take advantage of federal subsidies found in the Exchanges or have guaranteed issuance of coverage in the individual market," The association said in its letter. "Thus, in the interim, it is important to continue to be able to offer mini-med plans for part-time, seasonal, and temporary workers, as well as for those workers that are in an eligibility waiting period, to make sure a larger number of workers have at least some type of meaningful health insurance."

On Thursday, according to WSJ, "administration officials indicated they are hopeful that HHS Secretary Kathleen Sebelius will be able to allow certain waivers to the requirement, but that it was too early to confirm they will. She must wait for guidance from state insurance commissioners, and the administration doesn't expect to release the agency's final guidance until December."

Although the NAIC is close to completing its work, employers and insurers must make decisions now about their health insurance options for 2011, says Jay Angoff, director of the Office of Consumer Information and Insurance Oversight within HHS.

Angoff released this statement on the issue:

"As many employers and insurers consider health insurance options for 2011, one question that has been raised is the applicability of provisions of the Affordable Care Act to health plans and coverage with special circumstances. HHS remains committed to implementing the law in a way that minimizes disruption to coverage that is available today while also ensuring that consumers receive the benefits the Act provides.

"For example, pursuant to the Affordable Care Act and our regulations, HHS recently announced an expedited process for plans to apply for a waiver from the requirement in the Affordable Care Act establishing minimum annual limits where such limits would result in decreased access or increased premiums. HHS has approved dozens of these waiver requests, most often filed by so-called 'mini-med' plans, and in doing so, has ensured the continuation of health coverage for workers and their families. Complete waiver applications were generally processed in 48 hours.

"More recently, the issue of the applicability of the medical loss ratio requirements to plans such as mini-med plans has come up. HHS has not yet issued regulations implementing the medical loss ratio requirements because the Affordable Care Act tasks the National Association of Insurance Commissioners (NAIC) with first making recommendations to the Secretary.

"Although the NAIC is close to completing its work, we understand that some employers must soon make decisions regarding coverage options for 2011. As such, we fully intend to exercise her discretion under the new law to address the special circumstances of mini-med plans in the medical loss ratio calculations. According to the Affordable Care Act, medical loss ratio 'methodologies shall be designed to take into account the special circumstance of smaller plans, different types of plans, and newer plans.' We recognize that mini-med plans are often characterized by a relatively high expense structure relative to the lower premiums charged for these types of policies. We intend to address these and other special circumstances in forthcoming regulations."

According to National Underwriter Life & Health, officials of an insurance trade group that asked not to be identified said the statement was issued because "the timelines for implementation of the new rules for MLR "are either unrealistic or too tight for carriers and employers to carry out.

"Moreover, the rules at this time are unknown, the official said.

"'Technically, the NAIC is not required by statute to complete their work until Dec. 31, but the requirements go into effect Jan. 1, 2011,'" he noted.

"HHS has a role to play based on the work the NAIC does, and the NAIC needs to issue interim final rules by Nov. 1 to allow the 60-day comment period required before the rule is approved, he pointed out.

"At the same time, 'carriers and employers plan at least a year in advance of the next plan year,' he said. 'This gives them no time to sort out whether they can continue to offer coverage.'

"Moreover, 'Congress doesn't seem to be in any hurry to conduct oversight hearings to learn of these problems,' he said."

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