In a comment letter to the U.S. Department of Health and Human Services, the American Hospital Association has asked that the final medical loss ratio (MLR) rules under the Patient Protection and Affordable Care Act be changed.  The AHA would like all capitated payments to be classified as medical claims, including the entire cost of providing delivery plus the associated administrative overhead.

In its January 31 letter to HHS Secretary Kathleen Sebelius, Linda E. Fishman, the AHA’s Senior Vice President for Public Policy Analysis and Development, said such a change would be consistent with the National Association of Insurance Commissioners’ position that all capitated payments should be categorized as medical claims.  As the rules are currently written, only payments to physicians under capitated contracts are considered medical claims, and AHA believes that ambiguous language in the rules is creating unintended results.

“One of the unresolved issues that the AHA and other stakeholders raised during the NAIC’s deliberations regarding the treatment of capitated payments arose from a concern that insurers would attempt to shift significant administrative costs to the medical claims portion of the MLR equation by entering into capitated payment arrangements with intermediate risk-bearing organizations, such as medical management service organizations (MSOs), that are not part of a provider organization or integrated delivery system providing services to the plans’ enrollees,” the letter stated.  Tightening up the language of the rules, the letter continues, could solve this problem.

The AHA letter also requests clarification of a rule that would allow initiatives to improve healthcare quality to count toward the MLR. As written, the rule does not include participation in community-wide quality collaborative initiatives in medical claims costs, but counts prospective utilization review activities toward the MLR even if used for cost reduction rather than quality improvement.