Only MLR Rebate Recipients Should Get Rebate Notices

By Allison Bell
MARCH 5, 2012

Keep it simple, CMS.

Daniel Durham, an executive vice president at America's Health Insurance Plans (AHIP), Washington, and Colleen Gallaher, a senior vice president at AHIP, make that case in a comment letter submitted to the Centers for Medicare & Medicaid Services (CMS).

CMS recently published a Federal Register notice seeking comments on the guidelines the agency ought to set for insurers and health plans that are sending notices regarding the rebates required by the minimum medical loss ratio (MLR) provisions created by Section 2718 of the Patient Protection and Affordable Care Act of 2010 (PPACA).

Durham and Gallaher write on behalf of AHIP that CMS officials ought to avoid any rules that could make complying with the MLR rebate notice requirements any more expensive or complicated than the statute requires.

"Imposing an additional, unnecessary administrative cost is flatly inconsistent with the purpose of the MLR provision," Durham and Gallaher say.

The PPACA MLR provisions require insurers to spend at least 85% of large group plan revenue and 80% of individual and small group plan revenue on health care and quality improvement efforts. Insurers that find health care and quality expenses fall below the minimum must provide rebates.

One way to simplify the rebate notice process is to drop a CMS proposal that calls for requiring notices to go to individuals who will not be receiving rebates, the AHIP executives say.

PPACA Section 2718 does not require health plans to distribute notices to enrollees in plans that have met the MLR threshold, the AHIP executives say.

Requiring plans to send notices to those enrollees would be duplicative, unnecessary, costly and confusing, and the costs would clearly outweigh any benefit, the AHIP executives say.

An executive order requires CMS to analyze whether the benefits of a rule will justify the costs, and CMS officials have not yet analyzed the effects of requiring rebate information notices to go to enrollees who will not be getting rebates, the AHIP executives say.

CMS officials have estimated that the burden of the regulation would be $71 million, but that estimation process is not a substitute for full analysis, the AHIP executives say.

In addition, CMS should avoid setting notice requirements that are too detailed, because PPACA Section 2718 does not actually require that any insurers send any MLR rebate notices, the AHIP executives say.

Instead of setting detailed requirements for the notices, CMS should provide sample notices and describe the performance objectives, rather than say how insurers must try to meet the objectives, the AHIP executives say.

CMS officials add that the proposed model notices CMS officials did provide are too hard for consumers to understand and do not meet the government's own Federal Plain Language Guidelines.

The AHIP executives also ask CMS to let an insurer send a rebate notice to the employer policyholder, then let the employer tell employees about the rebate.

Requiring health plans to issue rebates to the employer and then send notices to the employer plan enrollees would increase administrative costs for the employers and require the employers to take complicated steps to inform insurers about the whereabouts of employees, the AHIP executives say.

AHIP should issue rebate notice guidelines as quickly as possible, to give companies time to put the changes into effect, the AHIP executives say.