Professor Mark Hall looks at how insurance companies are spending customer’s money

NEW YORK – In the first year of new medical loss ratio (MLR) requirements, insurers spent less than 1 percent of premium revenue on rebates or quality improvements, according to an analysis by the Commonwealth Fund.

In 2011, the amount of premiums rebated to plan members or reinvested in quality, safety or wellness improvements varied among publicly-traded, for-profit, nonprofit and provider-owned insurers, health policy researchers Mark Hall and Michael McCue found.

Publicly-traded insurers had lower MLRs in the individual, small group and large group markets and were more likely to owe members rebates than nonprofit and provider-owned insurers, according to the study.

Across all markets, more than 20 percent of for-profit and non-provider-affiliated insurers paid consumer rebates because they fell below the MLR baseline, compared to less than 10 percent of nonprofit and provider-based health plans.

Median quality improvement spending per member among nonprofit and provider-based health plans was also higher than the median among for-profit insurers, Hall and McCue found, after studying the 947 insurers that were subject to the MLR in 2011.

In total in 2011, the study found, insurers subject to the MLR spent a total of $2.3 billion (0.74 percent of premium revenue) on quality improvements, and, in a separate MLR category, spent $1.1 billion (0.35 percent of premium revenue) on quality and cost-reduction incentive payments to providers.

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