TITLE 13 INSURANCE
CHAPTER 10 HEALTH
INSURANCE
PART 27 UNIFORM
DEFINITIONS AND STANDARDIZED METHODOLOGIES FOR
CALCULATING THE MEDICAL LOSS RATIO
13.10.27.1 ISSUING AGENCY: New
Mexico Office of Superintendent of Insurance.
[13.10.27.1 NMAC
- N, 11/30/2012; A, 8/1/2020]
13.10.27.2 SCOPE: This rule applies to all health
care insurers, health maintenance organizations, or health care plans that are
required to obtain a certificate of authority or licensure in this state or
which provide, offer or administer managed health care plans.
[13.10.27.2 NMAC
- N, 11/30/2012]
13.10.27.3 STATUTORY AUTHORITY: Sections 59A-2-9, 59A-22-50,
59A-23C-10, 59A-46-51 and 59A-47-46 NMSA 1978.
[13.10.27.3 NMAC
- N, 11/30/2012; A, 8/1/2020]
13.10.27.4 DURATION: Permanent.
[13.10.27.4 NMAC
- N, 11/30/2012]
13.10.27.5 EFFECTIVE DATE: November 30, 2012, unless a later date is cited at the end of a
section.
[13.10.27.5 NMAC
- N, 11/30/2012]
13.10.27.6 OBJECTIVE: The purpose of this rule is to
clarify statutory requirements that insurers make reimbursement for direct
services at certain levels across all product lines by providing guidance and
establishing uniform definitions and standardized methodologies for the calculation
of the medical loss ratio for plan years 2010, 2011, 2012 and unless this rule
is repealed, for plan years thereafter.
[13.10.27.6 NMAC
- N, 11/30/2012]
13.10.27.7 DEFINITIONS: As used in this rule:
A. "health
insurer" means a person duly authorized to transact the business of
health insurance in the state pursuant to the Insurance Code but does not
include a person that only issues an excepted benefit policy intended to
supplement major medical coverage, including Medicare supplement, vision,
dental, disease-specific, accident-only or hospital indemnity-only insurance
policies, or that only issues policies for long-term care or disability income;
B. "direct
services" means services rendered to an individual by a health insurer
or a health care practitioner, facility or other provider, including case
management, disease management, health education and promotion, preventive
services, quality incentive payments to providers and any portion of an
assessment that covers services rather than administration and for which an
insurer does not receive a tax credit pursuant to the Medical Insurance Pool
Act or the Health Insurance Alliance Act; provided, however, that "direct
services" does not include care coordination, utilization review or
management or any other activity designed to manage utilization or services;
C. "health care
plan" has the definition found in Subsection J of Section 59A-47-3
NMSA 1978;
D. "health
maintenance organization" has the definition found in Subsection O of
Section 59A-46-2 NMSA 1978;
E. "premium"
has the definition found in Paragraph (3) of Subsection E of Section 59A-22-50
NMSA 1978;
F. "individually
underwritten" means any health care policy, plan or contract issued to
an individual or family reflecting the characteristics of the family members
covered; these characteristics include, but are not limited to, place of
residence, age, gender, and health status;
G. "carrier"
means health maintenance organization, health care plan, and health insurer;
H. "minimum
medical loss ratio" means the percentage determined in accordance with
section 8 of this rule;
I. "health product lines" means:
(1) all programs utilized by a health insurer for the offering
of products, including but not limited to:
(a) all private programs, including individual, small group and
large group;
(b) all public
programs, including all Medicaid and Medicare and any related or future
programs or products;
(c) all other arrangements for the procurement of health
coverage, including capitated arrangements, self-funded arrangements; and
(d) such other
programs or arrangements that the superintendent may designate by order or
bulletin; but not
(2) programs
of HIPAA excepted benefits intended to supplement major medical coverage,
including Medicare supplement, vision, dental, disease-specific, accident-only
or hospital indemnity-only insurance policies, or policies for long-term care
or disability income;
J. "product"
means any policy, plan or contract related to the provision of health care
services offered, arranged or facilitated by an insurer, including blanket
health insurance; and
K. “blanket health
insurance” has the definition found in Subsection A
of Section 59A-23-2 NMSA 1978.
[13.10.27.7 NMAC
- N, 11/30/2012; A, 8/1/2020]
13.10.27.8 MINIMUM MEDICAL LOSS RATIOS FOR ALL
HEALTH PRODUCT LINES:
A. General requirement. Carriers shall meet the minimum medical loss
ratio established, and in the manner calculated, under this rule.
B. Measurement period. Compliance with the minimum medical loss
ratio shall be measured over a rolling three-year period. The initial measurement period shall be the
years, 2010, 2011 and 2012. Each year
thereafter, the subsequent year shall be added to the rolling three-year period
and the oldest year shall be removed.
For example, the second measurement period shall be 2011, 2012 and 2013.
C. Aggregation. Medical loss ratios shall be calculated on a
consolidated level within a state, with experience allocated to state based
upon the situs of the contract.
Experience of all affiliates shall be accumulated to the following
levels:
(1) individually underwritten health policies;
(2) small group policies;
(3) large group policies and all other policies; and
(4) total of all group policies combined.
D. Frequency. Medical loss ratios shall be calculated
annually by carriers that issue products through health product lines,
beginning in 2013 covering the period 2010 through 2012.
E. Timeline. Medical loss ratios shall be calculated using
claim data incurred during the three-year measurement period and paid before June
30 of the year following the that period.
No adjustment may be made for incurred but not reported (IBNR)
claims. The compliance requirement form
set forth in Section 9 of this rule shall be the basis for the medical loss
ratio calculation and will be filed with the superintendent by July 31 of the
year following the measurement period.
F. Calculation. The numerator of the loss ratio calculation
shall be direct services, as defined by this rule less pharmacy rebates and
incurred or paid claims associated with self-funded plans and capitated
contracts. The denominator of the
calculation shall be premium, as defined by this rule less capitated contract
premiums, self-funded administrative fees, self-funded claim reimbursements,
any premium tax paid pursuant to the Insurance Premium Tax Act, and fees
associated with participating in a health insurance exchange that serves as a
clearinghouse for insurance. This
calculation is deemed to be fully credible due to the three-year time period
used and the aggregation levels required.
The New Mexico reimbursements and medical loss ratios for small group,
large group, and all other policies shall be calculated collectively across all
health product lines. The federal reimbursements
paid or due pursuant to 45 CFR Part 158 shall be subtracted from the New Mexico
reimbursement to calculate the final New Mexico reimbursement, which cannot be
lower than zero.
G. Minimum medical loss
ratio levels. The minimum medical
loss ratio levels applicable to the policy aggregation in Subsection C of this
section shall be as follows:
(1)
the minimum medical loss ratio level for individually
underwritten policies shall be eighty percent;
(2)
the minimum medical loss ratio level for small group
policies shall be eighty percent;
(3) the minimum medical loss ratio level for large group
policies and all other policies shall be eighty-five percent; and
(4)
the minimum medical loss ratio level for the total of
all group policies shall be eighty-five percent.
H. Compliance with minimum medical loss
ratio. With compliance requirement form set forth in
section 9 of this rule, each carrier shall submit to the superintendent either:
(1) a statement signed
by a qualified actuary that the minimum medical loss ratio requirements have
been met; or
(2) a plan to make the required reimbursements to policyholders.
I. Actions required
upon noncompliance with requirements.
The plan to make the required reimbursements to policyholders shall
provide either prospective premium credits or refunds to each policyholder who
was enrolled in the affected segment (i.e., individually underwritten health
policies, small group, or all other policies) during the last year of the
measurement period and provide that any such refund for a policyholder be
reduced by the amount of any rebate owing to the policyholder for a medical
loss ratio reporting year pursuant to 45 CFR Part 158 that coincides with such
measurement period. The premium credits or refunds shall be reflected in either
a one-time payment or premium credit or in multiple payments or premium
credits. Any such credits or refunds must be provided no later than the end of
December of the year following the applicable measurement period. The deadline for reimbursement may be
extended if the premium credits exceed the monthly premiums due by the end of
December of the year following the applicable measurement period. Any overage may be applied to succeeding
premium payments until the full amount of any refund has been credited. No later than March 31st of the second year
following the applicable measurement period the carrier shall demonstrate that
the refunds in the required amounts have been made or that premium credits are
being applied until such time as the full amount on the refund has been
credited. The prospective premium
credits or refunds shall be made on a per subscriber basis, unless an
alternative basis is approved by the superintendent of insurance and shown
separately on the policyholder's monthly (or other frequency) bill. This credit may reflect the family
composition of the rating structure used for each policyholder. Any premium
credit or refund to policyholders shall be based only upon the medical loss
ratios calculated for individually underwritten policies and for the total of
all group policies calculated collectively across all group health product
lines.
[13.10.27.8 NMAC
- N, 11/30/2012; A, 8/1/2020]
13.10.27.9 COMPLIANCE
REQUIREMENT FORM:
A. An Insurer shall use an OSI approved
form to submit minimum loss ratios.
B. The form shall
be posted to the OSI website.
[13.10.27.9 NMAC
- N, 11/30/2012; A, 8/1/2020]
HISTORY
OF 13.10.27 NMAC: [RESERVED]