Medicaid MCOs → Contracting → Medical Loss Ratio
Medical Loss Ratio
In view of recent Medicaid managed care regulations, it is anticipated that the National Diabetes Prevention Program (DPP) lifestyle change program can be accounted for in the numerator of the Medical Loss Ratio.
The Medical Loss Ratio (MLR) is the percentage of an insurer’s premium dollars that is spent on medical care and quality improvement activities. For example, if an insurer spends 85 cents of every premium dollar on medical care and quality improvement activities, its MLR is 85%. It is anticipated that the National DPP lifestyle change program can be accounted for in the medical care and quality improvement activity component of that calculation.
The final rule on Medicaid managed care regulations that CMS released in May 2016 addresses the calculation of the MLR. If the National DPP lifestyle change program is a Medicaid covered benefit, program expenditures can be included as incurred claims. If the National DPP lifestyle change program is not a covered benefit, it can still be counted as a quality improvement activity for purposes of the MLR calculation if administered in a way consistent with Title 45 of the Code of Federal Regulations (CFR). Title 45 addresses the rules and regulations regarding public welfare programs. The program must meet the requirements outlined in 45 CFR 158.150(b) and not be excluded under 45 CFR 158.150(c) (see 45 CFR 158.150(b)(1), (b)(2), and (c)).
Specifically, 45 CFR 158.150(b)(2)(iv)(A) includes the following language: “(2) Wellness/lifestyle coaching programs designed to achieve specific and measurable improvements; (3) Coaching programs designed to educate individuals on clinically effective methods for dealing with a specific chronic disease or condition; … (7) Coaching or education programs and health promotion activities designed to change member behavior and conditions (for example, smoking or obesity).”
45 CFR 158.150(c) lists exclusions to quality improvement activities and includes the following language: “(3) Those which otherwise meet the definitions for quality improvement activities but which were paid for with grant money or other funding separate from premium revenue; (4) Those activities that can be billed or allocated by a provider for care delivery and which are, therefore, reimbursed as clinical services [Note: these would count as incurred claims and be accounted for in the numerator of the MLR]; … (12) Costs associated with calculating and administering individual enrollee or employee incentives.”