FASTalert: New Medical Loss Ratio Threshold Mandated by Feds Will Jumpstart Technology Spending by Health Insurers
See WSJ Article. The new minimum Medical Loss Ratio (MLR) requirements mandated by the federal health overhaul will force health insurers to adjust their business models and aggressively reduce administrative expenses. The fastest way to reduce the MLR is to implement technology initiatives to automate and streamline processes and transactions.
MLR is a performance metric that measures the amount of spending on medical expenses as a percentage of total premiums or revenues. The new law stipulates that the MLR must exceed 80% for providers of individual and small-business health plans, and 85% for large-company health plans. Said another way, providers of individual and small-business health plans must not allocate more than 20% of total premiums to administrative costs plus profits, and providers of large-company health plans must not exceed 25%.Read More »