Last month, NovaRest’s Donna Novak made a presentation before the U.S. Department of Health and Human Services summarizing her findings on Medical Loss Ratio – a part of the Patient Protection and Affordable Care Act which limits the amount insurance companies can spend on administrative costs.
The presentation was the result of a year and half long study conducted by Ms. Novak and Jon Gabel of National Opinion Research Center (NORC), at the University of Chicago, to analyze over 2,500 filings by insurance companies to raise rates in 30 states.
Section 2718 of the Affordable Care Act (“ACA”) requires health insurance issuers offering group or individual coverage to submit a report to the U.S. Department of Health and Human Services (DHHS) each year with data on premium income, administrative expenses and medical claims expenses. These data allow regulators and consumers to calculate medical loss ratios – medical benefits/earned premiums. The study, conducted in part by NovaRest, created a baseline data on premium increases and medical loss ratios for the three years 2008-2011 in the small group and individual markets. To our knowledge, this study is the first of its kind to build a database from rate filings from state insurance departments.
“At the time the study began, little was known about the quality of data of rate filings to insurance departments. Many states have complete rate filings available on their websites, but other states consider them confidential,” said NovaRest Founder Donna Novak. “There is no uniformity between the state websites, this makes the research extremely difficult and time consuming.” However, the National Association of Insurance Commissioners enhanced its System for Electronic Rate and Form Filing (SERFF) in 2010 to increase its use in storing rate filings and to improve the ease of communication between state regulators and carriers. The SERFF system helps improve the uniformity.
NovaRest’s analysis is showing that there more transparency apparently due to ACA. “This will help consumer’s complete comparisons between various health care companies and improve regulator’s ability to review rate increases,” said Novak. “As the report is finalized we will update with the findings and statistics.”