TMA President Editorial in The Tennessean
The following editorial by TMA President B W. Ruffner, Jr., MD, is published today in The Tennessean:
Quality Patient Care Trumps Health Insurance Profits
A key component of the recently enacted Patient Protection and Affordable Care Act is a new restriction on the proportion of patient premium dollars that health insurance companies can spend on their own profits, CEO salaries and administrative expenses.
Beginning in 2011, each health insurance company in every state must follow a “medical loss ratio” formula (MLR) to spend at least 80 percent of individual and small group insurance premium dollars on direct patient medical care and activities to improve health quality.
For large health insurance companies, the minimum is 85 percent. The remaining 15 percent or 20 percent, as the case may be, goes to the health plan as profit and administrative costs.
Why should patients, physicians and the business community find this important?
First, if a health insurer does not meet the 80/85 percent standard, it will owe rebates to its customers (employers or individuals) for the difference.
Second, the more health plan money that is considered “administrative expense” as opposed to “quality improvement” in the MLR formula, the more money that will be available for direct patient health care.
Right now, the National Association of Insurance Commissioners (NAIC) is in charge of drafting a proposal for Health and Human Services Secretary, Kathleen Sebelius, to implement the MLR rules, including defining key terms and exceptions to the law.
Tennessee’s commissioner of commerce and insurance, Leslie A. Newman, is on the executive committee developing the rules for the MLR formula. NAIC’s decision will likely determine whether a large chunk of our health insurance premiums go for patient care or health plan profits.
Not surprisingly, health insurance companies have lobbied at every opportunity to be able to shift their administrative expenses into the quality improvement category of the MLR.
Insurance company expenses for things like utilization review, health professional hotlines, fraud expenses, network access and management fees, accreditation, provider credentialing and similar expenses are administrative activities that every health insurer must already do and are “the cost of doing businesses.” NAIC should consider them as “quality improvement” and categorize them as “administrative expenses” in the MLR rules.
That will ensure that more of our health insurance premiums will go toward direct patient medical care instead of health insurance industry profits.
Tennessee physicians, patients and employers should urge NAIC and especially Commissioner Newman to clearly distinguish quality improvement and administrative cost related expenses in the MLR. For the sake of a healthier Tennessee, I urge the NAIC to do the right thing for patients.