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HHS grants waiver to Maine insurers on MLR requirement

The Department of Health & Human Services is granting a waiver to Maine health insurers, giving them three years to meet the 80 percent medical loss ratio required under health reform.

The waiver was made under a section of the Patient Protection and Affordable Care Act that allows for an adjustment from the 80 MLR standard for a state's individual market if it's determined that upholding the standard "may destabilize the individual market in such state."

Maine is the first state to be granted such a waiver. Nevada, Kentucky and New Hampshire have similar waiver requests pending with the HHS.

[See also: State health insurance commissioners caught in the middle ; NAIC submits final medical loss ratio recommendations to HHS]

At issue in Maine were overtures by MEGA Life and Health Insurance that it would likely withdraw from the state if forced to immediately adhere to the 80 percent MLR standard. With only two other major insurers providing health insurance in Maine and with MEGA's 37 percent market share, Insurance Commisioner Mila Kaufman determined that a MEGA withdrawal would have a serious impact on the state's insurance market. The other two individual insurers, Anthem Blue Cross and Blue Shield of Maine and Harvard Pilgrim Health Care, have market shares of 49 percent and 13 percent, respectively.

A letter to Kaufman granting the waiver from Steven B. Larsen, deputy administrator of the HHS and director of the Center for Consumer Information and Insurance Oversight, agreed with Kaufman's market assessment.

"In addition to MEGA's demonstrated history of exiting another line of business in the State of Maine, MEGA had a 37 percent market share in the Maine individual market as of September 2010. This is a particularly high market share for a potentially departing issuer," the letter stated. "The coverage alternatives available from Anthem are not comparable to MEGA products and ... the superintendent is limited in her ability to issue regulations requiring other issuers to issue policies comparable to MEGA's offerings.

Harvard Pilgrim's individual policies are issued through the state's public-private partnership Dirigo Health, which Larsen's office determined would also not provide a viable source of insurance for a sizable portion of MEGA's customer base.

According to data supplied by the Maine Bureau of Insurance in its waiver request, MEGA would be able to meet the current state requirement of 65 MLR, which has been state law since 1993.

While the waiver was granted for three years, the third year will only be granted if MBI is able to present information using 2012 market data that indicates a risk of market destabilization remains.