The Medical Loss Ratio (MLR) provision ensures that a minimum percent of health insurance premiums are used to pay claims and limits the amount health insurance companies can spend on administrative expenses and profits. The Affordable Care Act (ACA) requires that 80% - 85% of premium dollars be spent on medical care.
The MLR Shared Savings provision allows payers to include, in the numerator of their MLR, certain “shared savings” payments that are offered to encourage enrollees to shop for higher-value, lower-cost plans.
Market impact of this provision effects Individual Family Plan (IFP), Small Business Markets (SBM), Core, and Premier lines of business.
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