The Medical Loss Ratio (MLR) reporting and compliance requirements are among the most complicated and most heavily scrutinized aspects of the hugely daunting Affordable Care Act (ACA). But insurers who stay on top of their MLR reporting are much more likely to bypass costly rebates that could result from failing to expend a large enough percentage of premium revenues -- 80% or 85% -- on medical care.
The Department of Health and Human Services recently proposed some leniency adjustments called “Benefit and Payment Parameters for 2015” on the MLR formula to account for the high administrative costs associated with the law’s rollout. Insurers fared much better last year, issuing a total of just over $500 million in rebates to customers, down from $1.1 billion in the previous year. But the administrative burden of the ACA rollout is expected to bump the rebate figure back up this year, pending the proposed changes.
Even if changes are approved they will be temporary, so it is best for insurers to plan as if no relief is in sight. Since 2010, those payers who have paid close attention to their MLR reporting -- in real-time, every day of the year -- have been in the best position to avoid costly rebates. In this case, the right technology can make all the difference, turning a complicated issue into a business opportunity.
MLR data must be audit-ready and accurate in each type of report, whether internal, regulatory, or market-facing. That can be a challenge, however, due to limited reporting capabilities, unknown points of failure, and inconsistent source systems that aren’t well equipped for audits.
Real-time monitoring, however, captures and reports data from membership, claims, and billing systems, ensuring that the data is clean, accurate, and reliable. It sets companies up well for responding to the two biggest needs of MLR: sustainable quality improvement investments and a real-time focus on reducing administrative costs.
Quality improvement can mean a lot of things. The most palatable investments in this area tend to revolve around patient safety, efforts to prevent hospital readmissions, reduction of medical errors, lower infection and mortality rates, and promotion of healthy activities.
While there are obvious human elements to each quality improvement, technology has shown its ability to have an impact on these areas, particularly relating to cleaner interactions among the parties involved in healthcare and insurance delivery. Among the solutions that technology is providing in the investments in quality are:
- Improved payer and provider interaction. Through real-time claim analytics, claim errors, coding violations, and discrepancies are revealed up front so that bad data is spotted instantly and interaction with providers is kept simple and clean.
- Monitoring and tracking of member and payer interaction. With access to claim history and records in compliance with guidelines, as well as a monitoring of health guideline and educational information, those interactions are easily seen and accessed.
- Managing of payer and regulatory interaction. The most important relationship in the MLR sphere, insurers must deliver quality reports in a timely fashion in a way that measures care effectiveness.
As for the reduction of administrative costs, technology automates the monitoring and reporting processes, creating greater efficiencies that have both financial and customer service benefits. Tools improve member enrollment processes and reconciliation, speed up communications, and enhance claim handling.
The tools optimize administrative tasks, helping companies streamline processes so they save money and time. They also offer real-time visibility into premium risks, helping ease the burden of financial metrics management.
With states like California moving to expand MLR to dental insurance, the time is right for insurers to look at how they’re addressing the issue across all their coverage. Automating processes and preserving data integrity with the right tools will keep your company ahead of the ACA curve.
Joe Susai is the Director of Research and Development at Infogix, Inc., a pioneer of automated data integrity controls and predictive analytics allowing enterprises to operate efficiently, minimize risk, maximize revenue and manage the customer lifecycle. Prior to coming to ... View Full Bio