Columbia Regional Business Report
By Bill Poovey
Published June 25, 2013
More than 119,000 South Carolina consumers whose health insurers failed to spend enough premium dollars on patient care are due to get rebates totaling $6.2 million from the insurers.
The rebates announced by the federal agency stem from 2012 health insurer data required by the Affordable Care Act’s medical loss ratio, or 80/20 rule. Insurers must spend at least 80 cents of every premium dollar on patient care and quality improvement, an HHS statement said. If they spend more on other expenses like profits, marketing and salaries, they owe the rebates back to consumers.
HHS reported a total of $500 million in rebates nationwide.
In South Carolina, the state’s largest health insurer, BlueCross BlueShield, owes the largest total to individuals, at $3.4 million, with its Blue Choice Health Plan due to pay $133,357. The report shows Golden Rule Insurance Co. owes rebates totaling $1.24 million; Carolina Care Plan Inc., $701,174; Freedom Life Insurance Co. of America, $171,333; John Alden Life Insurance Co., $167,407 for individual and $17,138 for small group; Mid-West National Life Insurance Co. of Tennessee, $137,200; Trustmark Life Insurance Co., $89,021 for small group; and United Healthcare Services, $47,416 for small group.
BlueCross BlueShield said in a statement Tuesday that rebate checks will be mailed in late July to about 58,000 individual members of BlueCross and BlueChoice HealthPlan. BlueCross spokeswoman Patti Embry-Tautenhan said the insurer’s records do not show that any of its small or large business groups qualify for rebates.
The rebates average $71 for BlueCross members and $15 to BlueChoice HealthPlan members.
Jim Deyling, president of private business at BlueCross BlueShield of S.C., said in the statement that “governmental MLR requirements do not address the root cause of rising health care expenses. We are complying with the law, but our concern remains that rebates not only create a false impression of overpricing, but also reveals the fundamental flaw of the legislation, which is that it does nothing to reduce health care expense for members.”
HHS said the insurance companies that failed to meet the standard will notify consumers.
The rebates will be paid in mailed checks, in lump-sum reimbursements to credit or debit card accounts used to pay premiums, or in future premium reductions. In some cases, employers will apply the rebate in a manner that otherwise benefits employees, such as more generous benefits.
HHS said insurance companies operated more efficiently last year than in 2011 nationally, saving consumers more than $3.4 billion in premiums. In South Carolina, rebates totaled $19.6 million in 2012 and the average refund was $131.
FOR IMMEDIATE RELEASE
June 20, 2013
Contact: HHS Press Office
Consumers saved $3.9 billion on premiums in 2012
Health care law will provide families an average of $100 back in premium rebates
Today, the Department of Health and Human Services (HHS) announces that nationwide, 77.8 million consumers saved $3.4 billion up front on their premiums as insurance companies operated more efficiently. Additionally, consumers nationwide will save $500 million in rebates, with 8.5 million enrollees due to receive an average rebate of around $100 per family.
Today’s report includes the 2012 health insurer data required under the Affordable Care Act’s Medical Loss Ratio, or “80/20 rule.” The report shows that, compared to 2011, more insurers are meeting this standard and spending more of their premium dollars directly toward patient care and quality, and not red tape and bonuses.
Created through the Affordable Care Act, the rule requires insurers to spend at least 80 cents of every premium dollar on patient care and quality improvement. If they spend a higher amount on other expenses like profits and red tape, they owe rebates back to consumers. For many consumers, the report found that the law motivated their plans to lower prices or improve their coverage to meet the standard. This new standard and other Affordable Care Act policies contributed to consumers saving approximately $3.9 billion on premiums in 2012, for a total of $5 billion in savings since the program’s inception.
“The health care law is providing consumers value for their premium dollars and ensuring the money they pay every month to insurance companies goes toward patient care,” HHS Secretary Kathleen Sebelius said. “Thanks to the law, 8.5 million Americans will receive $500 million back in their pockets and purses.”
If an insurer did not spend enough premium dollars on patient care and quality improvement, rebates will be paid in one of the following ways:
· a rebate check in the mail;
· a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card;
· a reduction in their future premiums; or
· their employer providing one of the above, or applying the rebate in another manner that benefits its employees, such as more generous benefits.
Insurance companies that do not meet the standard will send consumers a notice informing them of this new rule. The notice will also let consumers know how much the insurer did or did not spend on patient care or quality improvement, and how much of that difference will be returned as a rebate.
The 80/20 rule, along with the required review of proposed double-digit premium increases, works to stabilize and moderate premium rates. And, with the new market reforms, including the guaranteed availability protections and prohibition of the use of factors such as health status, medical history, gender and industry of employment to set premiums rates, this policy helps ensure every American has access to quality, affordable health insurance.