MLR

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Executive Summary

The healthcare industry is undergoing a significant transformation, moving away from volume-based care towards value-based models that prioritize patient outcomes and cost efficiency. This issue brief delves into delta MLR contracting, a type of value-based contracting that measures and rewards improved performance based upon incremental improvements in medical loss ratio. 

Delta MLR contracting is the next chapter on the way to full risk delegation, aiming to improve medical loss ratios by reducing unnecessary utilization through innovative tech-enabled care delivery transformations and offering the potential for future revenue increases for providers who achieve improved quality and appropriately document and code clinical conditions for accurate risk adjustment.

Medical Loss Ratio (MLR) refers to the percentage of premiums payers spend on medical claims and healthcare quality improvement, as opposed to administrative costs and profits. Delta MLR contracting presents an innovative framework for population health providers and virtual care organizations to align to the clinical and operational value created for risk bearing entities. Below we discuss the necessary emphasis in delta MLR contracting on the integration of documentation and coding practices, data, actuarial analytics, quality initiatives, and medical management. We also focus on the need for full financial alignment of virtual care solutions and risk bearing entities in achieving the Quintuple Aim.

By focusing on these elements, innovative providers can enhance patient outcomes, optimize financial performance, and navigate the complexities of value-based care more effectively. 

Continue Reading Delta MLR Contracting: Integrating Risk, Quality and Affordability

Payers, Providers, and Patients – Oh My! Is Crowell & Moring’s health care podcast, discussing legal and regulatory issues that affect health care entities’ in-house counsel, executives, and investors. In this episode, hosts Payal Nanavati and Joe Records sit down with Xavier Baker and Kevin Kroeker to discuss medical loss ratio requirements. The first episode…

Payers, Providers, and Patients – Oh My! Is Crowell & Moring’s health care podcast, discussing legal and regulatory issues that affect health care entities’ in-house counsel, executives, and investors. In this episode, hosts Payal Nanavati and Joe Records sit down with Xavier Baker and Kevin Kroeker to discuss medical loss ratio. This episode touches on…

On May 6, 2016, CMS published the Medicaid managed care final rule in the Federal Register. The Final Rule overhauls Medicaid managed care for the first time in 14 years and tracks many of the industry-wide developments that followed enactment of the ACA. Given the breadth of the rule, Crowell & Moring is covering…

On December 2, 2015, CMS will publish a notice of proposed rulemaking for its Notice of Benefit and Payment Parameters for 2017 (“Proposed Rule”). The Proposed Rule articulates the federal government’s policy for health care coverage under Affordable Care Act programs and would make several notable changes, including stricter network adequacy requirements for qualified health…

The Treasury Department and the Internal Revenue Service released a final regulation providing guidance to Blue Cross and Blue Shield (and other qualifying healthcare organizations) on computing and applying the medical loss ratio (MLR) under Code Section 833(c)(5), which is effective as of January 7, 2013 and applies to tax years beginning after December 31, 2013. Under Code Section 833(c)(5), qualifying organizations (including Blue Cross and Blue Shield organizations) are provided with favorable income tax treatment, including: (1) treatment as stock insurance companies, (2) a special deduction under Code Section 833(b), and (3) the computation of unearned premium reserves based on 100 percent of unearned premiums under Code Section 832(b)(4). However, the Patient Protection and Affordable Care Act (ACA) added a provision to the Code, requiring that a qualifying organization must  have a medical loss ratio (MLR) of at least 85 percent to get favorable income tax treatment under Code Section 833(c)(5). For purposes of Code Section 833, an organization’s MLR is its percentage of total premium revenue expended on reimbursement for clinical services provided to enrollees under its policies during such taxable year (as reported under Section 2718 of the Public Health Service Act (PHSA)).
Continue Reading Treasury Dept. and IRS Release Guidance to Qualifying Healthcare Organizations Computing and Applying MLR

On November 25, 2013, the Department of Health and Human Services (HHS) released a Proposed Notice of Benefit and Payment Parameters for 2015 regarding the Affordable Care Act’s Transitional Reinsurance Program (TRP) fee.

The Proposed Notice includes the previously announced carve-outs from the TRP fee for the 2015 and 2016 years for certain self-insured, “self-administered” …

On May 20, 2013, the Centers for Medicare and Medicaid Services (CMS) released the final regulations on the Affordable Care Act’s (ACA) medical loss ratio (MLR) requirements for Medicare Advantage and Medicare Prescription Drug Benefit Programs (PDP). The final MLR rule is largely identical to the proposed rule and generally tracks the requirements of the …