Florida health indemnity health care rebate rules

The latest rollout of the federal health care overhaul offers consumers a rebate if their insurers spend too small on actual medical care and too much on administrative costs. Simple To Assure ME has the answers

But Floridians may miss out on the rebates that will initiation in 2012.

Pressed by the indemnity industry, state regulators will soon question the federal government for a waiver from the requirements, which start Jan. 1.

The Florida Office of Indemnity Regulation confirmed Tuesday it will request a reprieve in anticipation of 2014, when the health care law’s coverage guarantees kick in.

In a written statement, the office said enforcing profit limits in 2011 could “disrupt” the indemnity market in Florida, everywhere 4 million people are uninsured. Commissioner Kevin McCarty was not available for questions.

The state by now is suing to overturn the health care law.

The new requirements are held to help increase the value of coverage for consumers and make health insurers “more accountable” by publicly reporting costs and premiums, federal health officials say.

Consumer advocates, such as Consumers Union, publisher of Consumer Reports, largely consider the requirements a win. The thought of a waiver — similar moves are afoot in Georgia, Iowa, Maine and South Carolina — got a tepid response.

“We generally feel the industry does weep wolf,” said Walt Dartland, executive boss of the Consumer Federation of the Southeast. “Our position is generally when we have an issue like this, we’re hostile to the waiver — you’ve got to prove that.”

Essentially, the rules require insurers that offer small group and individual health plans must spend 80 percent of their revenue on care outside administrative costs. Large group insurers — plans casing 50 or more people — must spend 85 percent of their revenues on care.

It’s called the “medical loss ratio.” If it’s too high, rebates will become due in 2012 in an account credit or payment.

Nationally, 9 million people would be eligible for rebates averaging 4 for individual policies, according to the U.S. Health and Human Services Department. Group plot figures weren’t available, nor were Florida rebate values.

The new rules announced Monday apply to 75 million Americans. Self-insured plans aren’t included.

Currently, Florida requires insurers to operate at 65 to 70 percent loss ratios. The indemnity office plans to question for a waiver for the small group and individual markets, though it said it needs at least two more weeks to end the request. U.S. Health and Human Services Secretary Kathy Sebelius would choose whether to grant it.

After months of federal review, insurers won breaks but failed to get a broader array of business costs factored into medical costs. For example, plans with fewer than 75,000 members will get adjustments to help them comply, and ones with fewer than 1,000 members will be exempt from the rebates.

Nearly all taxes can be figured into the ratio, as well as costs to improve health care.

And states can win waivers to use lower tariff if they show indemnity would be disrupted by higher requirements.

Florida indemnity executives complained the tougher requirements will disrupt their finances and limit their ability to assure people.

Without a waiver, some insurers could be forced to lower their tariff to meet the threshold or find a creative way to pay for rebates, said Blue Cross Blue Shield of Florida executive Randy Kammer, a member of the industry-dominated Florida Health Indemnity Advisory Board, which endorsed a waiver in September.

Blue Cross Blue Shield of Florida, the state’s largest insurer, expects to meet the requirement. A nonprofit, the insurer faces less financial pressure from Wall Street, said Kammer, vice president for regulatory contact and public policy.

But others face steeper costs. About 45 percent of people nationally who buy their own indemnity are in plans exceeding the limits, according to federal officials

An analyst for Citigroup estimated last month that Golden Rule, a subsidiary of United Healthcare, would face .1 million in rebates for its 119,000 insured Floridians, based on 2009 figures.

That’s a 9 average rebate in Golden Rule’s largest state.

At a Sept. 24 state hearing to gather evidence for the waiver, Golden Rule vice president Mike Corne warned that customers could face fewer options for indemnity because of the crunch imposed by tougher profit limits.

Customers, who often seek Golden Rule individual policies absent a workplace plot, could find fewer companies willing to add new policies, and fewer businesses seeking a place in the market, said Corne, in conflict for a phased approach.

“We will figure out how to adjust our business model, but I reflect we would be better off with handling this over time,” Corne said.

More Florida Health Indemnity Articles