Feds gathering input on medical loss ratios and reviewing health insurer rate hikes

The federal health-care reform law includes a number of insurance market reforms intended to protect consumers. Among them, it requires health insurers to submit data on how much money they spend on care versus profits, advertising, etc. (In case you're taking notes, the term for this is the "medical loss ratio.")

The new law says that if the medical loss ratio is below a certain level, people enrolled in that particular health plan will get rebates.

The U.S. Department of Health and Human Services is gathering public input on how to put in place policies to define and calculate this percentage. Here's a letter that HHS Secretary Kathleen Sebelius sent to the National Association of Insurance Commissioners about the matter. (And here's the Federal Register notice.)

A similar process is underway for elements of the law involving health insurer rate hikes. The law requires HHS to work with the states "to establish an annual review of unreasonable rate increases, to monitor premium increases and to award grants to states to carry out their rate review process." The law also requires insurers, starting this year, to post on their websites any justification for such a rate increase. (For a lot more detail on this aspect of the law, see this request for comments, also published in the Federal Register.)