Experts say Vertically Integrated Insurers, Providers may be able to Skirt Medical Loss Ratio Rules

Insurers that own medical clinics may be able to use these relationships to game medical loss ratio requirements, according to a new analysis. Health Affairs reported that a recent study found that across several states in 2023 there was a significant increase in payments that were not related to specific claims, particularly in Medicare Advantage (MA).  Experts view this as a positive as it indicates that value-based care models are making an impact and shifting payments away from traditional fee-for-service paradigms. However, they warned it could signal that vertically integrated companies are also leaning on these relationships to "weaken" the impact of MLR requirements. Under the Affordable Care Act, insurers are required to spend at least 80% of premium revenue on medical care in the individual and small group markets, and the ratio rises to 85% in large group coverage.  The paper, however, outlines a scenario where a vertically integrated insurer treats a patient at one of its in-house clinics, and then a patient covered by a different payer also visits that location for the same care. The provider charges a $300 cost for the services rendered to the outside payer. However, the integrated insurer pays the provider $500 for that service. That $200 does not account for enhancements to care or additional services, but makes progress toward the medical loss ratio despite the revenue remaining within the same overall company.