Medicare Advantage


Over at the Journal of Healthcare Finance, David Anderson, Sih-Ting Cai and Jean Marie Abraham have published an interesting idea which I've never thought about before:

In 2019, CMS (2020b) began publishing its Quality Rating System (QRS) for incumbent insurers who sell qualified health plans in the individual market. This information includes scores for medical care, member experience, and plan administration which are then rolled up into an overall, global quality rating (GQR). Recent research has shown notable variation by plan characteristics for behavioral health quality (Abraham, et al., 2021) and plan administration scores (Anderson, et al., 2020). CMS hopes this information is used by consumers to make enrollment decisions.

Believe me, I was certain that I had finally gotten this year's Medical Loss Ratio (MLR) rebate project out of my system. I really was.

However, there was one other MLR-related issue which I've wondered about for years: The ACA requires that carriers who sell policies in the Individual and Small Group markets spend at least 80% of the premium revenue on actual medical claims (limiting them to a 20% gross margin), and 85% on the Large Group market (limiting them to 15% gross).

That accounts for around 165 million people, give or take...roughly 50% of the total U.S. population...but what about the other private (or at least semi-private) insurance markets? I'm referring, of course, to privately-administered Medicare and Medicaid plans...aka Medicare Advantage and Managed Care Organizations (MCOs).