Health insurer anti-fraud expenses will be left from the Medical Loss Ratio in a rule released by the feds. This decision deals with Medicaid managed care, and frustrated state and federal fraud busters. The impact will spread throughout the world of healthcare.
First, a short history: The Affordable Care Act requires health insurers to spend 80 or 85 percent of costs on claims and health services. This limits how much insurers can spend to run the business.
Regulators were left to decide what insurer expenses will be included in the MLR. The Coalition and other fraud fighters diligently tried to show federal and state regulators why anti-fraud expenses should be included. Effective fraud fighting is directly linked to the quality of healthcare that consumers receive in many cases.
What makes this decision a bit grating is that federally funded health programs like Medicaid are required to have anti-fraud efforts. Yet those expenses are excluded from the MLR, and thus, health plans have little incentive to invest more in combating fraud.
This decision has impact well beyond state-federal Medicaid.
States usually look to the feds for guidance when writing their own regulations. If the feds exclude fraud expenses from the MLR, then states will be reluctant as well.
We’ve urged insurance regulators to include the MLR. They’re often sympathetic, yet gamely stick to excluding anti-fraud expenses.
Fraud fighting is essential to quality patient care; this isn’t mere overhead. Scams often harm patients with worthless and botched treatments that also can max out their policy limits. Stopping money-draining schemes also helps reduce the cost of health services. This benefits everyone.
That’s the rub. Fraud fighters know that good anti-fraud efforts reduce healthcare costs and improve services. Yet regulators stubbornly stay reluctant to even consider including anti-fraud expenses in the MRL.
It’s time for fraud fighters to speak out, and tell regulators and policymakers that fraud-fighting expense should be included in the cost of paying healthcare claims.
About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.