HHS Rule on Medical Loss Ratio Definitions: Quality Improvement Is In & Utilization Review Is Out

On December 1, 2010, the federal Department of Health and Human Services (HHS) released its interim final rule (IFR) on health plan medical loss ratios (MLR). The MLR is the percentage of premium revenues that an insurer pays for direct medical or health care services. The IFR specifies the activities that are considered to be medical and/or health care expenses—and clarifies which costs are not. Health plans can include the costs of quality improvement activities as a medical expense toward the MLR, but not the costs of retrospective and concurrent utilization reviews.

Direct health care costs include goods . . .