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ACL Tip Sheet: Understand the Medical Loss Ratio (MLR)

The Affordable Care Act (ACA) requires all health insurance plans to submit data on the proportion of premium revenues spent on clinical services and quality improvement programs, also known as the Medical Loss Ratio (MLR). The ACA sets a minimum value for that MLR (referred to as the minimum standards).  This tip sheet from the Administration for Community Living (ACL) explains the MLR in detail, and walks through its implications for community-based organizations (CBO) looking to partner with health plans.

Part of the MLR consists of “Quality Improvement Activities” (QIAs). QIAs are services that an insurer or their partners provide that lead to measurable improvements in patient outcomes or patient safety, prevent hospital readmissions, promote wellness, or enhance health information technology in a way that improves quality, transparency, or outcomes. Provider credentialing is also included as a health care improvement activity under the ACA.

CBOs that provide QIA services have an opportunity to provide services to health plans that are required to meet the MLR standard. This means the CBO can provide something of value to health plans, and the health plans should be willing to pay for this value. However, in order to be of value to the health plans, the CBO’s services must meet the QIA standard that requires a level of clinical expertise. In addition, CBOs must be prepared to meet the NCQA credentialing standards. The NCQA credentialing standards require licensed personnel to provide oversight and quality assurance for services provided.

 

ACL Tip Sheet: Understand the Medical Loss Ratio (MLR)