Insurers are finding it difficult to comply with a provision of the Affordable Care Act
Arkansas businesses and consumers are owed a great deal of money from the state’s health insurance companies. According to the Centers for Medicare and Medicaid Services, these companies collected too much in premiums last year and are now required by federal law to reimburse consumers and businesses. Per the Affordable Care Act, insurers are required to spend no less than 80% of the money they collect from premiums on medical care, something that some insurers have found difficult to comply with in the past.
Medical loss ratio has created new challenges for health insurance companies throughout the country
This provision of the Affordable Care Act is known as the medical loss ratio. Insurers providing coverage to employers are also susceptible to this provision, as the law requires that they spend 85% of the money they collect from premiums on medical care rather than salary and administrative costs. If insurers are not able to meet the medical loss ratio, they must return the money they collected. For some insurers, this may represent a significant financial blow.
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Insurers owe a collective $7.1 million in rebates to consumers and businesses in Arkansas
The Centers for Medicare and Medicaid Services notes that Arkansas health insurance providers owe consumers and businesses some $7.1 million in rebates. Only one of the companies offering coverage through the state’s insurance exchange owes rebates: Centene. The insurer spent approximately 75% of the $133 million it collected in premiums last year on medical care, according to the Centers of Medicare and Medicaid Services.
Overall, consumers throughout the US have received $470 million in rebates from insurance companies
Arkansas is not the only state where insurers owe rebates, of course. The Centers for Medicare and Medicaid Services have reported that some 5.5 million consumers throughout the country have received $470 million in rebates to date. Some insurers have found it difficult to comply with the medical loss ratio provision, largely due to the costs associated with doing so. Pressure from federal officials is beginning to change this, however.