Self-Insurance Institute of America (SIIA) told a group of National Association of Insurance Commissioners (NAIC) officials on a conference call that stop-loss insurance carriers should not be subject to medical loss ratio (MLR) requirements, as established by the recently-passed Patient Protection and Affordable Care Act (PPACA).
“While many of the NAIC participants seemed to agree with SIIA’s position based on the resulting dialogue, others did not concede the point,” said a statement from SIIA.
PPACA tasked the NAIC with development of guidelines for the enacted Medical Loss Ratio (MLR) limitation provisions, with the recent conference call being part of the development process.
SIIA supported its position by stating that it has been involved from the early stages with the principal drafters of the PPACA, noting that: “it was not Congress’s intention to apply MLR limitations on insurers who do not provide direct medical coverage. In fact, the drafters of the PPACA specifically excluded self-insurance from having to comply with MLR.”
The question was also raised whether to apply the MLR limitations on reinsurance policies of affiliated carriers. On this matter, SIIA stressed that there is a clear distinction between the definition of stop-loss insurance and that of reinsurance purchased by affiliated carriers to guard against their own risk exposure.
“As it seems probable that the NAIC will ultimately recommend that the MLR requirements be applicable to such reinsurance, it became abundantly clear that the regulators must understand that stop-loss is significantly different and should not be joined in with how such reinsurance is governed,” said the statement.
As a follow-up to yesterday’s call, SIIA submitted comments to the NAIC’s working group this morning. Michael Ferguson, chief operating officer of SIIA, said:
"We listened very carefully to the discussion on July 6, 2010 and agree with Julia Philips that there may be definitional issue with the current IRD018. It is important to clarify the difference between reinsurance, insurance sold to another insurance company or health plan, versus stop- loss insurance which is sold to a self-funded employer or Union-sponsored health plans.
"Reinsurance is a transaction that is appropriate for consideration in your MLR discussions, but stop-loss falls outside the scope of the PPACA and should be intentionally excluded from discussions."