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Anthem to Issue Contract Addendums re MLR to Fully Insured Groups
Jan 26, 2012
Beginning in 2012, Anthem Blue Cross will file medical loss ratio reports with the U.S. Department of Health and Human Services. The medical loss ratio is the percentage of premiums (less federal and state taxes and licensing or regulatory fees) that insurers spend on medical care. This includes claims and services that make health care quality better. Under the health care reform law, health insurance issuers that don’t meet certain minimum medical loss ratios must give out rebates.
To obey the law, Anthem is adjusting their fully insured group plan contracts to prepare for any potential rebates. The contract addendum says the employer must give rebates to enrollees if they give a rebate to the group.
Anthem is taking this approach to rebates because the amount of rebate an enrollee gets depends on how much the employer gave toward the premium (which is information Anthem does not have) and other factors. To figure out rebates for Anthem customers within the required time frame, they would need to collect a huge amount of information from all of their fully insured customers. This would create a major administrative burden for Anthem customers. Therefore, Anthem developed a different approach that supports customers who can get rebates, while not affecting customers who cannot.
Contract addendums are not needed for Individual market plans. If a rebate is due to Individual policyholder, Anthem will send a check straight to the policyholder. The medical loss ratio provision does not apply to self-insured plans.