KCUR News
9:54 am
Mon March 28, 2011

Medical Loss Standard Difficult For Some Companies To Meet

TOPEKA, Ks. – One part of the federal health reform law that went into effect one year ago requires companies to spend most of the premium dollars they collect on health care for their customers, but some companies may struggle to meet that requirement.

A new study in the American Journal of Managed Care estimates that at least half of the health insurers selling individual policies in nine states may be unable to meet the new requirement. If so, they may have to pay rebates to their customers.

Kansas Insurance Commissioner, Sandy Praeger, is concerned about the way some insurance companies are going about trimming their administrative costs.

"Companies are finding that the easiest way to deal with the cap on administrative costs is just either lower or completely delete that agent commission," Praeger says.

Praeger says people need the help of an agent to understand their benefits and navigate the claims process. She says independent agents represent the buyer, not the company, so perhaps their commissions shouldn't count toward administrative overhead.

Praeger is currently weighing whether Kansas should apply for an adjustment that would ease the new requirements for two or three years.