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CMS provides flexibility on medical loss ratio deadline and rebates due to COVID-19

The flexibility will permit insurers to prepay to enrollees a portion or all of the estimated MLR rebate for the 2019 MLR reporting year.

Susan Morse, Managing Editor

The Centers for Medicare and Medicaid Services is relaxing enforcement of the Medical Loss Ratio report due to COVID-19.

As a result of the updated 2019 Benefit Year Risk Adjustment timeline, which is used in medical loss ratio calculations, issuers may require additional time to complete and submit the 2019 MLR Annual Reporting Form, CMS said.

Therefore, the agency will not take enforcement action against an issuer that submits the 2019 MLR Annual Reporting Form by August 17, instead of July 31, as is usually required.

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In an issued bulletin, CMS has established a temporary policy of relaxed enforcement under which insurers may prepay enrollees a portion or all of the estimated medical loss ratio rebate for 2019.


CMS said the flexibility to prepay enrollees a portion or all of the estimated MLR rebate for the 2019 MLR reporting year will support continuity of coverage for enrollees who may be struggling to pay premiums because of illness or loss of income resulting from the COVID-19 public health emergency.

The COVID-19 pandemic's postponement of elective surgeries and regular care has created a surplus in revenue for insurers due to lower spending.

The Kaiser Family Foundation has estimated that insurers will be issuing a total of about $2.7 billion across all markets – nearly doubling the previous record high of $1.4 billion last year.

Many insurers are rebating this money now, rather than waiting for 2021 to create immediate value for members, according to the Advisory Board.


The Affordable Care Act requires health insurance issuers offering group or individual health insurance coverage to submit a report to the Secretary of the Department of Health and Human Services concerning their medical loss ratio.

The Medical Loss Ratio standard requires these insurers to spend 80% to 85% of their premium income on medical care and healthcare quality improvement, leaving the remaining 20% or 15% for administration, marketing and profit.

The ACA also requires such plans to provide an annual rebate to enrollees if they do not meet these requirements.

An issuer's MLR and rebate calculations must account for, among other things, the net payments or receipts related to the risk adjustment program.

CMS updated the 2019 Benefit Year Risk Adjustment timeline so that the deadline for submission of final 2019 Benefit Year Risk Adjustment data was extended to May 14. This extension shifted the timeline for release of the 2019 Benefit Year Summary Risk Adjustment Report to no later than July 17.

Twitter: @SusanJMorse
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