The Centers for Medicare and Medicaid Services (CMS) has announced a final ruling for the federal medical-loss ratio (MLR), setting it at 85%. The ruling states that 85% of insurer’s Medicaid revenue must be spent on medical care activities that aim to improve quality of service. The rest of the revenue is allowed for salaries, marketing, and other tasks. Insurers who do not meet these requirements will face a lowered rate in the future.
The rule was proposed in May 2015 and was developed as a method to maintain managed Medicaid in states, which states have used to cut down on costs. In 2015, about 46 million low-income Americans have enrolled in a managed Medicare plan and the number of enrollees continue to rise. The CMS had estimated that the collections from Medicaid plans that fall below the 85% standard would fall between $7 billion to $9 billion within 2018 to 2020.
In addition to the 85% MLR, the CMS removed the quantitative time and distance standards from the ruling, which would have set time and distance standards for certain providers. This ruling can allow for managed-care enrollees to have adequate access to an in-network provider. The CMS changed the ruling to allow the states to decide on these standards.
Read the original article from Modern Healthcare here.
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