Health insurers to provide $75.6M in rebates

BOSTON — More than 350,000 Massachusetts health care consumers will be getting "rebates" from several major private health insurers under a state law requiring them to spend a majority of premiums on medical services.

That's according to the Healey administration, which announced Tuesday that a review by the state Division of Insurance has determined that five of the state's health insurance carriers had medical loss ratios lower than the required threshold and must return $75.6 million to ratepayers.

Those companies are Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc., Fallon Community Health Plan, Inc., Harvard Pilgrim Health Care, Inc., Mass General Brigham Health Plan, Inc., and UnitedHealthcare Insurance Company, according to the agency.

"These rebates are more than just numbers — they're dollars back in the pockets of families and small business owners across the commonwealth," Division of Insurance Commissioner Michael Caljouw said in a statement.

"The enforcement of this law is part of our larger strategy of protecting Massachusetts health care consumers and encouraging insurers to be more efficient, reduce administrative overhead and focus on cost-effective ways to deliver care," he said.

Under the federal Affordable Care Act, known as "Obamacare," private insurers are required to spend a certain percentage of premium payments on medical care and healthcare quality, known as the medical loss ratio.

Massachusetts has the highest standard in the country, requiring 88% of premiums to be spent on health care services for individual and small groups and 85% for large groups. The law doesn't apply to self-insured plans.

Under the law, when an insurer's average medical loss ratio over a three-year period falls below the required threshold, the company is required to rebate a portion of premium payments to individuals and small employers.

The rebates cover a portion of the difference between what the insurance carriers charged in premiums and what they actually spent on health care costs. Insurers can issue the rebates as a check or a credit on future premium payments.

Last year, insurers were forced to refund health care consumers $51.6 million after state regulators determined they had medical loss ratios below the required threshold.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group's newspapers and websites. Email him at cwade@cnhinews.com.