Some health plan members will get rebates from insurers [Virginian – Pilot]

By Amy Jeter

The Virginian-Pilot

More than 375,000 Virginia families can expect to receive rebates averaging $115 from their insurance companies in the next few weeks, federal officials announced Thursday.

The rebates are the first to come from a provision of the Affordable Care Act that requires insurers to spend at least 80 percent of premium dollars on medical care and efforts to improve the quality of health care.

If insurance companies spend too much on administrative costs and profits, they must provide a rebate of the difference to customers by Aug. 1.

The provision, called the medical loss ratio, took effect last year. It applies to plans in the individual market and those provided by small businesses or some large employers. Self-funded plans, in which an employer pays the cost of health benefits from its own assets, are not subject to the rule.

Federal officials hail the medical loss ratio as a way to hold insurance companies accountable and give better value to consumers.

The insurance industry maintains that the rule doesn't address the real drivers of health care cost increases, and that it penalizes insurers for efforts to improve the quality of care, such as initiatives to prevent fraud and abuse.

However, some say even people who won't receive a share of the $1.1 billion rebates paid out nationally will benefit from the rule.

"Had rebates been paid last year, the rebates would have been close to $2 billion," said Timothy Jost, a professor at Washington and Lee University School of Law in Lexington. "What's happened is that insurers are moderating their premium increases. They're becoming more efficient, and that benefits everybody."

Nationally, about 12.8 million people who are covered by qualifying plans will benefit from a rebate, according to the U.S. Department of Health and Human Services. Far more - 66.7 million - won't because their insurers met or exceeded the standard.

In Virginia, 14 insurers will issue rebates totaling $43.1 million, and 687,000 people will benefit, according to federal data. The money comes as a check, a lump-sum to a bank account or a reduction in future premiums. In some cases, an employer can choose how to use the rebate to benefit employees.

Federal officials didn't answer a question from The Virginian- Pilot about what would happen to the rebates if the U.S. Supreme Court overturns the health law. A ruling is expected next week.

Anthem Health Plans of Virginia is sending checks for about $10 to 240,000 members of its individual plans, said Scott Golden, a company spokesman. About $800 will go to 17,000 businesses that subscribed to one of Anthem's preferred provider organization, or PPO, plans in the small-group market, he said.

Golden refused to provide Anthem's ratio for the plans but said the insurer was paying a small rebate relative to the medical costs it covered.

Optima Health, the insurance arm of Norfolk-based Sentara Healthcare, will pay an average of $180 to 2,800 subscribers to its individual plan, said Andy Hilbert, the insurer's chief financial officer. The company exceeded the requirement for its small-group and large-group plans with medical loss ratios of 84 and 92 percent.

To meet the requirement, Optima held premium rates flat in 2011, said John DeGruttola, Optima's senior vice president for sales and marketing.

Optima's individual plan posted a ratio of 71 because it was relatively new and because medical costs were lower than expected, Hilbert said.

To increase next year's ratio, Optima reduced the plan's premium by 10 percent in January. The insurer also continues to work on improving efficiency through technology and wellness programs.

"Our goal would be not to send out any rebates in 2012," Hilbert said.

Amy Jeter, 757-446-2730, amy.jeter@pilotonline.com

$43.1 million

In Virginia, 14 insurers will issue rebates totaling $43.1 million, and 687,000 people will benefit, according to federal data.

insurers providing rebates in Virginia*

Individual market

Anthem Health Plans of Virginia Inc.

Golden Rule Insurance Company

Humana Insurance Company Inc.

Optima Health Insurance Company

The MEGA Life and Health Insurance Company

Time Insurance Company

Plans provided by small businesses

Anthem Health Plans of Virginia, Inc.

CareFirst BlueChoice Inc.

Guardian Life Insurance Company of America

Optimum Choice Inc.

Southern Health Services Inc.

UnitedHealthcare Insurance Company

UnitedHealthcare of the Mid-Atlantic Inc.

Plans provided by large employers

Aetna Health Inc. (a Pennsylvania corporation)

CareFirst BlueChoice Inc.

Connecticut General Life Insurance Company

Guardian Life Insurance Company of America

UnitedHealthcare Insurance Company

UnitedHealthcare of the Mid-Atlantic Inc.

* The medical-loss-ratio standard doesn't apply to self-funded plans, in which an employer pays the cost of health benefits from its own assets.

Source U.S. Department of Health and Human Services