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Consumers win on insurance rebates; Medicaid Pilot gets extension

Federal health officials gave Florida two decisions of huge potential importance on Thursday, and both offered consumer advocates a reason to smile.

Insurers and agents, not so much.

One ruling from the Department of Health and Human Services (HHS) allows the state to extend its controversial Medicaid Reform Demonstration program – which the state now calls the Medicaid Pilot -- through June 2014.

But the extension came with a raft of conditions that are aimed at protecting patients. For example, HHS said plans can no longer set an arbitrary cap on spending per-patient.

The second ruling denied the state’s request to waive rules on insurer spending that are part of the Affordable Care Act. This decision applies to both Medicaid patients and those with private coverage.

The ruling requires insurers to spend at least 80 percent of the premiums they collect from small groups and individuals on patient care and quality-improvement, up from the current 65 percent minimum in Florida.

This minimum spending rule – called the Medical-Loss-Ratio, or MLR -- will be 85 percent for large-group plans.

If insurers violate the MLR rule by using too much of the premium for administration, marketing and profits, they'll have to rebate the extra money to customers.

The MLR ruling was fought by insurers and especially independent brokers and agents, whose commissions cannot be counted as part of the 80 percent. Florida Insurance Commissioner Kevin McCarty had sought the waiver, saying some companies might pull out of the state because of the spending rule and that agents are important aides to consumers who are seeking coverage.

The waiver extension on the Medicaid Pilot, which had been expected, included the consumer-protection provisions outlined in an article by Health News Floridaon Wednesday.

But the MLR was more of a surprise. “We’re elated,” said Brad Ashwell of the Florida Public Interest Research Group (FPIRG).

“Our health insurance dollars should be going towards actual care, not excessive industry profits and inefficient business practices by the insurance industry,” he said.

It is too soon to tell how much money insurance consumers may expect in rebates, since it depends on 2011 data that will be analyzed next spring. If the MLR rule had been in effect in 2010, about 340,000 Floridians might have been entitled to an estimated $60 million.

For more details on the Medicaid Pilot waiver approval, see this articlefrom Associated Press.

For more details on the MLR waiver denial, see this article from the St. Petersburg Times.

--Health News Florida is an independent online publication dedicated to journalism in the public interest. Editor Carol Gentry can be reached at 727-410-3266 or by e-mail.

Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.