HealthLeaders-InterStudy, a provider of managed care market intelligence, reports that some health insurers in Illinois, Iowa, Kansas and Missouri will have trouble meeting the minimum medical loss ratio (MLR) requirements in federal health insurance reform legislation.
According to the recent Heartland Health Plan Analysis, as insurers in the Midwest adapt to new federal medical loss ratio standards implemented through healthcare reform, smaller insurers will have trouble remaining competitive.
The report also finds that because medical and pharmacy expenses can be counted against a health plan’s MLR requirements, more plans will have an incentive to increase spending on clinical programs that focus on care management and improved health outcomes. With an increased focus on health outcomes, plans will favor maintenance drugs, particularly those for chronic diseases such as diabetes.
“Acquisitions and consolidations are going to become more common as smaller insurers decide they do not have the leverage, staff and resources to meet the requirements of federal healthcare reform,” said Joel Peyton, market analyst with HealthLeaders-InterStudy. “As plans struggle to remain competitive in this highly consolidated environment, they will focus on increased medical and pharmacy spending, which will have a favorable result for pharmaceutical companies. Higher MLR requirements will benefit prescription drug sales as more resources are directed to patient care.”
Source: HealthLeaders-InterStudy
Topics Profit Loss
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