Managed Care

 

States and plans adjust to ACA’s reality

MANAGED CARE March 2012. © MediMedia USA
Managed Care Outlook

States and plans adjust to ACA’s reality

MANAGED CARE March 2012. ©MediMedia USA

The Affordable Care Act sets a minimum medical loss ratio of 85 percent for health plans that participate in the large group market and 80 percent for the individual and small group market. Plans will have to get their administrative costs under control just to be able to keep premiums competitive, many experts believe.

“Most health insurers adjusted pricing to comply with this new requirement” in 2011, according to A.M. Best, the credit rating company. Still, while utilization was lower for the second straight year, overall earnings were affected by the medical loss ratio (MLR) requirements.

“Health insurers are contemplating strategies for the future, which include marketing to individuals, growth in Medicaid, and ways to streamline processes and lower administrative costs,” says the Best report “Health Insurers Adapting to a Changing Environment,” which uses data it has collected, as well as government numbers, to reach its conclusions. If a state has concerns about meeting the 80 percent MLR, it can request a waiver.

“To date, 17 states have filed for an adjustment,” says the Best report. Nine were denied and six were granted.

Minimum loss ratio waivers
2011 2012 2013
Georgia 70% 75% 80%
Iowa 67% 75% 80%
Kentucky 75% 80% 80%
Maine 65% 65% 65%*
New Hampshire 72% 75% 80%
Nevada† 75%
*Maine must file additional data in 2012 to continue with adjustment in 2013
†Nevada applied for only a one-year adjustment for 2011

Costs will rise, but can stakeholder co-operation help?

The bigger picture shows that national health expenditures as a percentage of gross domestic product will continue to grow, “with a 20 percent increase in Medicaid expenditures projected in 2014.” The study says that health insurers and providers “have a renewed interest in cooperating and improved coordination of care. Both providers and insurers are studying and experimenting with payment methods that are based upon care management and outcomes.”

Medicare and Medicaid spending ($billions)

Medicare and Medicaid spending ($billions)
Source: “Health Insurers Adapting to a Changing Environment,” January 2012, A.M. Best

National health expenditures as percentage of GDP

National health expenditures as percentage of GDP
Note: Data are reflected in five-year increments, and includes the year of the study (2011) and the year the ACA mandates take effect (2014).

Meetings

Private Health Insurance Exchanges Conference Washington, D.C. October 7–8, 2014
National Healthcare Facility Management Summit Palm Beach, FL October 16–17, 2014
National Healthcare CFO Summit Las Vegas, NV October 19–21, 2014
National Healthcare CXO Summit Las Vegas, NV October 19–21, 2014
Innovative Member Engagement Operations For Health Plans Las Vegas, NV October 20–21, 2014
4th Partnering With ACOs Summit Los Angeles, CA October 27–28, 2014
2014 Annual HEDIS® and Star Ratings Symposium Nashville, TN November 3–4, 2014
PCMH & Shared Savings ACO Leadership Summit Nashville, TN November 3–4, 2014
World Orphan Drug Congress Europe 2014 Brussels, Belgium November 12–14, 2014
Medicare Risk Adjustment, Revenue Management, & Star Ratings Fort Lauderdale, FL November 12–14, 2014
Healthcare Chief Medical Officer Forum Alexandria, VA November 13–14, 2014
Home Care Leadership Summit Atlanta, GA November 17–18, 2014