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HEALTH REFORM: Alternative Provider Reimbursement Models – How Are They Treated Under MLR Rules?




In a recent health reform alert, “New Rules Issued on Medical Loss Ratio Requirements,”[1] we described the rules issued by the Centers for Medicare & Medicaid Services (“CMS”) and the U.S. Department of Health and Human Services regarding the calculation of the Medical Loss Ratio (“MLR”) pursuant to the Patient Protection and Affordable Care Act (45 C.F.R. Part 158). Such rules require individual and group health plans (other than self-funded health plans) to spend a minimum percentage of premium towards medical expense or “medical loss” (or else provide rebates to enrollees). Other expenses are generally considered “administrative” and not counted toward such minimum. For purposes of this alert, “medical expense” (or “medical loss”) is defined primarily as “incurred claims” and certain quality improvement activities (“QIAs”).

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