Democratic Lawmakers Speak Out Against Insurers’ Attempts To Circumvent Health Law Requirements

As the National Association of Insurance Commissioners (NAIC) prepares to submit its medical loss ratio (MLR) recommendations to HHS, 65 Democratic members of Congress are asking the group to develop a strict definition of ‘quality improvement measures’ — a new category established by the health care law that allows insurers to count expenses that ostensibly improve health quality, as medical costs.

After decades of trying to lower their medical loss ratios and please Wall Street investors, insurers are now frantically trying to inflate that number to meet the new MLR provisions. The industry sees the category of ‘quality improvement expenses’ as an opportunity to reclassify certain expenses as medical costs, thus inflating insurers’ medical loss ratio percentage without improving efficiency. “This definition should recognize the full range of health plan activities — both directly and indirectly related to patient care — that have the primary purpose of improving patient outcomes,” AHIP argued in a letter sent to HHS in May, and provided a long list of services like “nurse call lines,” “quality research and reporting programs,” and “consumer education programs” that it believes should be included in the “quality” category.

But the lawmakers in this letter are calling on NAIC to follow the spirit of the health care law and only include those services that actually improve health quality:

As you continue to work with your colleagues from the National Association of Insurance Commissioners (NAIC), we ask that you consider the strictest definition of “quality improvement expenses” when implementing the mandatory medical loss ration standards set forth in the PPACA….insurance companies are urging regulators to pursue lax definitions of ‘quality improvement expenses’ that include operational and administrative costs, which would render requirements weak and frustrate the goals of this landmark law.

While insurance companies have claimed that some of the costs that they wish to include are for the purposes of patient protection, they offered little evidence that specific services do provide improved quality. It is misguided to assume that these costs are specifically for the benefit of health and well-being of the patient, as intended in the law.

Indeed, while some services can certainly improve health care quality, others, are simply administrative costs in ‘quality’ clothing. ‘Nurse hotlines, for instance, “may offer advice to individual policyholders, but also work with a stated goal of cost containment by preventing calls to doctors and visits to their offices.” ‘Utilization review’ is an administrative function designed to restrict treatment and activities related to disease management and health/wellness promotion programs “are not directly related to quality improvement for particular patients and should be excluded.” As the Federation of American Hospitals has pointed out, “the inclusion of a separate category specific to activities that improve health care quality is not as common, and requires a close focus by federal regulators to avoid becoming a “catch-all” into which a wide variety of expenses not directly related to patient care and clinical service quality may arbitrarily be placed.” Bottom line is: the insurer must provide credible scientific evidence that the function improves the health quality of individual policyholders, before any particular service is included in the quality definition.

This letter is a good start, but placing pressure on the NAIC and insurers is politically advantageous and relatively painless. Convincing HHS to reject the group’s recommendations however, and adopt more stringent rules — should that be necessary — will probably be more difficult for Democrats to accomplish. Fortunately, Sen. Jay Rockefeller (D-WV) is already paving the way.