Estimating the Financial Impact of MLR Compliance on Insurers

Thursday, August 19th, 2010
This post was written by Patricia Donovan

Starting in January, payors will have to spend 80 to 85 percent of collected premiums on medical services and quality improvements. While the HHS awaits the NAIC’s final recommendations on the final medical loss ratio (MLR) formula, a featured story in this week’s Healthcare Business Weekly Update estimates the financial impact of MLR compliance on insurers.

According to HealthScape Advisors Managing Director John Steele, advance planning can soften the financial blow. During a recent webinar on preparing for January’s MLR compliance regulations, Steele had this advice for payors:

Get together a team to look at some of the immediate compliance requirements on quality improvement, allocation methodologies, aggregation by the segment, as well as that preliminary financial impact and some preferred approaches. It may not be all accounting-related. It could be looking at your product portfolio or some of your cost management. Look at all of those areas and try to do a longer term forecast that would then flow into overall strategy development — look at where you’re going to go, not only from the accounting side but also opportunities to diversify products. Look at total cost management.

Also this week, learn how continuing diabetes education for Medicare and commercial populations is paying off for certain insurers. You can also join the more than 110 healthcare companies that have weighed in on the benefits of health coaching. Take our third annual Health Coaching survey by August 31 and get a free e-summary of the results next month.

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