11/28/11 HHS/The Center for Consumer Information and Insurance Oversight (CCIIO) rejected requests from Indiana and Louisiana for waivers which would have allowed insurers in those states to phase in the ACA's medical loss ratio (MLR) requirements.

The ACA allows the Secretary to adjust the medical loss ratio (MLR) standard for a state if it is determined that meeting the 80% MLR standard may destabilize the individual insurance market. In order to qualify for this adjustment, a state must demonstrate that requiring insurers in its individual market to meet the 80% MLR has a likelihood of destabilizing the individual market and result in fewer choices for consumers. As part of the ACA, if insurers fall short of the standards in 2011, they'll have to issue rebates for that amount in 2012.  

CCIIO determined that the states' health plans can meet the MLR threshold set in the ACA and that consumers will get better value without an adjustment. Indiana requested that the MLR percentages be set at 65% in 2011, 68.75% in 2012 and 72.5% in 2013. But CCIIO responded that the evidence presented by the state "does not establish a reasonable likelihood" that the 80% standard would destabilize the Indiana market. CCIIO said that many issuers won't owe rebates because they meet the 80% threshold and that those that will be expected to pay are sufficiently profitable, or are adapting their business models, to absorb the impact of the payments. Indiana also had asked for an MLR percentage of 76.25% for 2014, a permanent waiver for consumer-driven health plans (often known as high-deductible plans) and a waiver for new entrants into the individual market until 2014. But HHS officials said they only have the authority to grant adjustments for three years in the individual market.

Louisiana asked for an adjustment of the standard to 70% for 2011 and 75% for 2012. CCIIO responded that there is no "reasonable likelihood" that the 80% MLR standard would destabilize the market in Louisiana. CCIIO said that many insurers already meet the MLR standard and that the others are either sufficiently profitable or are adapting their business models so that they can remain profitable in the individual market.

HHS has approved waivers for Georgia, Iowa, Kentucky, Maine, Nevada, and New Hampshire. In July HHS denied North Dakota's request for a waiver. In September HHS denied Delaware's request. The other states that have applied and are awaiting determinations include: Kansas, Florida, Michigan, Texas, Oklahoma, North Carolina and Wisconsin. For more information on states and the MLR requirements visit the Center for Consumer Information and Insurance Oversight (CCIIO) website at: http://cciio.cms.gov/programs/marketreforms/mlr/index.html

11/23/11 President Obama announced his intention to nominate Marilyn Tavenner to succeed Donald M. Berwick as administrator of the Centers for Medicare and Medicaid Services (CMS). Tavenner will serve as administrator on an acting basis during the confirmation process, which will be handled by the Senate Finance Committee. Berwick's resignation is effective December 2, 2011. His recess appointment was set to expire December 31, 2011. Tavenner has been the principal deputy administrator at CMS since February 2010 and served as acting administrator from February to July 2010. A former secretary of health and human resources in Virginia, Tavenner is expected to be confirmed.

President Obama nominated Berwick three times but could never get a confirmation hearing. As a result, Obama appointed him during the July 2010 recess because he believed that Berwick was the best choice to lead the implementation of reforms under the ACA, but that only allowed him to serve through the end of this year. It was not clear Wednesday when the White House would send Tavenner's formal nomination up to Capitol Hill or when a confirmation hearing would be held.

In an email to HHS staff, Secretary Kathleen Sebelius praised Berwick and said Tavenner has been his partner. Tavenner has a strong knowledge of Medicare and Medicaid reimbursement policy. After her almost 20 years in nursing, 3 years as a hospital CEO and 10 years in various senior executive level positions for Hospital Corporation of America, she became Virginia's secretary of health and human resources in Governor Tim Kaine's administration. She oversaw a dozen health agencies, including the state's Medicaid program. The outgoing CMS administrator Berwick did not say what his immediate plans are. Berwick is expected to return to his home in Boston and spend time with his family before deciding his next move.

11/22/11 The National Association of Insurance Commissioners (NAIC) passed a resolution urging Congress and HHS to provide insurance agents and brokers with relief from the ACA's medical loss ratio (MLR) formula. The vote passed 26-20 during a conference call of insurance commissioners. The resolution calls on Congress to quickly consider legislation to amend the MLR provisions of the ACA in order to remove broker and agent compensation from the MLR calculation and it asks HHS to consider a menu of regulatory options.

Commissioners supporting the resolution posed it as a measure to preserve consumer access to agents and brokers, but consumer advocates were united in their opposition. Commissioners against the resolution said the vote was an uncharacteristic political move for the organization.

The MLR provision only allows insurance companies to spend 15 or 20% of their revenues on profit and administrative cost. Brokers want an exemption from the MLR because they're concerned insurers will cut commissions in order to release money for other uses. Under the medical loss ratio regulations created by the ACA, insurance companies in the individual and small-group market must spend at least 80% of premium dollars on health care services or quality improvements rather than administrative costs. If insurers do not meet that standard, they have to offer rebates to consumers. Under the MLR rule, brokers' fees are considered administrative costs. Brokers say that insurance companies are reducing their fees in order to trim administrative expenses. House bill H.R. 1206 sponsored by Michigan Republican Rep. Mike Rogers, would exempt fees charged by health insurance brokers from being classified as administrative costs under the regulations. Although the measure has 138 bi-partisan cosponsors it is unlikely to pass through Congress this year. The NAIC has been divided over the issue for months. In June, an NAIC task force agreed to support the Rogers bill but the full NAIC did not endorse it. Research done in May 2011 by the NAIC found that had the MLR provision of the ACA been in effect last year, consumers would have received about $2 billion in rebates.

Read the NAIC resolution at:

NAIC Resolution