North Dakota’s PPACA Waiver Request Denied

North Dakota is the first state to have its request to loosen requirements for health insurers under the federal health care reform law rejected, the Department of Health and Human Services announced. 

The North Dakota Department of Insurance had requested an adjustment of the 80 percent medical loss ratio (MLR) to 65% MLR for 2011, 70% for 2012, and 75% for 2013.

However, HHS said that North Dakota’s application makes it clear that:

• No issuer is reasonably likely to withdraw from the individual market.
• Every issuer is pricing, or will be pricing, to an 80% MLR, and
• Consumers are not likely to lose access to agents and brokers.

Based on the information provided, North Dakota’s market is able to meet the 80% MLR standard in the near future, according to the announcement.

Issuer Evaluation

HHS went on to note that North Dakota does not identify any particular issuer as reasonably likely to withdraw from the individual market, and that the state’s dominant issuer (Blue Cross Blue Shield (BCBS)) had a 2010 MLR of well above 80% and has publicly opposed an adjustment.  Medica, a new entrant that is likely to grow its business to become credible in 2011, will price to an 80% MLR and therefore does not expect to owe rebates in 2011 or beyond. 

While Time expects to pay rebates in 2011, they will remain profitable in the individual market even after payment of rebates. Time also will also price to an 80% MLR in 2012 and is therefore unlikely to leave the market.  Lastly, although North Dakota recently lowered its State MLR standard from 65% to 55%, the two newest issuers into the market are too small to be subject to rebate provisions in 2011 and both of these new entrants are already pricing to an 80% MLR.

Further explaining its decision, HHS said that North Dakota consumers are not likely to lose access to agents and brokers, and that the state did not provide specific data on the likelihood of reduced commissions, on the number of agents or brokers who might leave the business, or on the number of North Dakotans who could be affected. 

For these reasons, HHS said it has determined that no adjustment to the MLR standard in North Dakota is necessary.  More information is available at http://cciio.cms.gov/programs/marketreforms/mlr/medical_loss_ratio_north_dakota.html

Along with its decision on North Dakota, HHS granted requests from Iowa and Kentucky for an adjustment to the medical loss ratio (MLR) requirement insurers must meet under the Patient Protection and Affordable Care Act.  More information is available at http://cciio.cms.gov/programs/marketreforms/mlr/index.html