Skip to comments.White House unveils awaited Affordable Care Act profit margin rule
Posted on 02/16/2013 7:20:45 PM PST by Libloather
A proposed federal rule to cap profit margins for certain health insurance plans and prescription drug benefit programs is now available for review.
The latest in a raft of rules required by President Obamas landmark healthcare law, the proposed rule was drafted by the Centers for Medicare and Medicaid Services (CMS) and sent to Pennsylvania Avenue on Thursday.
The White Houses Office of Information and Regulatory Affairs (OIRA) is moving quickly to issue the proposal, which will hit the Federal Register on Tuesday. That begins a 60-day comment period. CMS will consider all comments before finalizing the rule.
The 116-page proposed rule can be read here. The rule is considered economically significant, meaning it carries an economic impact of more than $100 million.
The measure would implement 85-percent medical loss ratio requirements on Medicare Advantage plans and the Medicare Prescription Drug Benefit Program. In other words, plans that deliver services under those plans must spend at least 85 percent of their premiums on clinical services, prescription drugs, quality improving activities, and direct benefits to beneficiaries, according to the proposal.
Overhead expenses and profits would be capped at 15 percent.
While those broad contours of the plan were set out in the Affordable Care Act, the healthcare industry has anxiously awaited the proposed language, which details nuances of the forthcoming regulations.
The rule would also institute penalties for those providers that fail to meet the caps requirements.
If a plan sponsor fails to meet MLR requirements for more than 3 consecutive years, they will also be subject to enrollment sanctions and, after 5 consecutive years, to contract termination, according to language in the proposal.
Since 2011, most general health insurers have been required to spend either 80 percent or 85 percent of their revenue on medical expenses, depending on their size. The rule expanding caps to Medicare Advantage - a program aimed at the elderly and disabled - and the Prescription Drug Benefit Program is set to take effect next January.
Ask an older person in military contracting how well cost plus contracting reduced costs.
I’ll bet this is first time the Federal Govt has ever dictated profit...Thanks to our African style nutcase-dictator. It all started in Hawaii while chooming around and being mentored (molested?) by Frank Marshall Davis
Meaningless PR stunt, as the rates get jacked up per percentage.
Extortion-Care: Make bricks without straw.
The president is a fool. An arrogant fool, but a fool nevertheless. Perhaps he should read up on Diocletian’s freezing of food prices in fourth century.
So how about we cap the net worth increase of every public office holder at 15% over his net worth at the time of taking office?
And let’s do the same to the faceless bureaucrats who administer this crap.
.....and everyone in the IRS, FDA, FCC. SSA, TSA, FBI, DHS, HHS, etcetera, etcetera, etcetera (done in best Yul Brynner voice.)
How come we can’t tell the Street Punk in Chief to stick it where the Sun don’t shine? I believe we the people have spoken loudly for four plus years now telling him, and the rest of government we don’t want this healthcare plan.
Why are we still saying no when we already said NO?
What do we have to do to impress upon those that allegedly represent we the people that we the people are not happy with the shoving of their stuff in our faces?
Is it going to take the revolution I keep reading about?
This crap has got to stop, and stop now.
How many other ways are there to say NO? Perhaps we should try one of them.
-——Overhead expenses and profits would be capped at 15 percent———
Humm....as expenses creep up profits will go down...
Services will be cut...
I wonder if “overhead “ expenses include fixed and variable costs....and did they change the depreciation rules ?
Huge impact on the bottom line...
There should be a LAWSUIT taken to SCOTUS over the ‘dictating profit’ or ‘profit cap’ portion of 0bamacare; UNCONSTITUTIONAL!
Gag me with a spoon.
Who needs economic literacy when you’ve got social justice, right?
The idea is not to dictate profit but to crush the system under so many rules.
No bidders? The government will just have to run it for you.
Just think of the ‘projected savings’ on a single payer system!
I am sure this will result in a superior product and service. /s
When you include contractors how many people work for state, county, city, federal governments in America? My guess is 40% of the work force
Does anyone else feel we're living Atlas Shrugged?
Hate to disillusion you, but we (not you , me or most on FR but a majority) reelected this turd to another 4 years. In his mind he has a man-date.
NOT the least bit disillusioned about that as it was fraud that put the bastard back in office no matter what the pundits, etc. are saying. The Democrats no matter what anybody says did cheat in multiple ways, and those that are elected to represent our interests in this matter are not for various reasons. It has to change even if it means we actually have to do something.
EVEN IF the bastard had won by a vote, or two he would act as though he had a mandate to Communize this country. It’s what he is focused upon doing no matter what. He agreed with his peers to be their gofer, their yes man, their point man in taking out this country in one of the slickest con jobs ever. He is doing precisely as his people, his party has promoted him to do IMO.
The guy isn’t there for America. NOT at all.
how would you cap “overhead” expenses when the government has only just started to make all their demands?
I just received a letter that effective May 1 the new occupants will discontinue serving Medicare patients, recognizing only Humana, Optimum, Freedom and WellCare.
"We ask that if you do not have one of the insurances listed above that you find another physician at your earliest convenience."
These doctors all know that Medicare will not reimburse diddly-squat and are adjusting accordingly....through early "retirement" and other maneuvers.
Folks, this was dropped on me like a bombshell after just getting out of the hospital from a bout of pneumonia. Despite being ill, I had to scramble to find a new family doctor and get my records to him. It was a nightmare.
I urge you to check with your family medical providers to see what's up with them. Press your doctor even if he's as lovable as Doctor Gillespie....because they may be secretive about any changes they're making. Check out your parent's or family seniors' future status for them also.
It may be difficult to find a Medicare doctor who won't be on overload.
A word to the wise....... it's here.....and ObamaScarey is NOT going to be kindler and gentler.
Every new thing revealed about 0bamaCare convinces me more and more that two years from now the health care system will come to a dead stop as no providers or suppliers will be able to comply and the FedMob keeps relentlessly pushing Forward.
I think that was the plan
I think so too. But I don’t think they have any idea how it will play out or what to do about it. They think they will just jump in with a single-payer gooberment-run system but there won’t be anything but smoking ruins to build it on.
We lost our fitness center reimbursement benefit because of this rule. Fitness centers apparently aren’t considered part of quality care, so they were overhead, and no company can afford to give away overhead.
Remember that communist utopia requires everything to be destroyed, how to build utopia from the ashes? Nobody knows.
Whenever someone told me they had a contractor building their house for cost plus 10%, I always asked them “Whose cost?”
They do it to the Oil Industry. (Not that it makes it right, mind you.)
Imagine if law firms that handle malpractice claims had to function under terms similar to Obamacare. Imagine they're limited to 15% profit. And could only charge fees set by the feds. And were required to represent everyone who asked. And could only build their case around criteria set by boards of partisan appointees. Can you imagine the ruckus?
There are millions of people who want to see this. They read the rules you posted and ACTUALLY BELIEVE their lives will improve. But their first choice is to get obama named King For Life and congress disbanded and made illegal.
15% profit AND overhead costs
How do you limit overhead knowing full well they have just barely begun to toss paperwork, regulations and mandates on your business?
my sister needed an MRI on my niece and was going to have to pay cash... gotta a real discount “after hours”.
I don’t believe that 0bama or the other idiot Dems think that it will be an ash heap. In their little unicorn brains they imagine themselves just plucking the evil capitalists out of their positions and replacing them with noble Progressive bureaucrats while the machinery just keeps on running.
Good point. Obamacare by design isn't about clarity. IMHO it's about control that can intrude and regulate whenever it wills.
and it never seems to work where ever its tried
If the government sets the profit, and the government sets the costs, then the private sector will set the only thing they can, availability.
There is always a backlash too. I look forward to Backlash American Style. Sort of.
It’s hard to follow vague rules when the regulators can determine what they mean after the fact
Instead of Atlas Shrugged, it'll be your Doctor SHRUGGED and SHUNNED you!!!
That is it, exactly.
...you get LESS of it.
Prepare yourself, and your families, for SHORTAGES of anything that is so regulated.
God help us all.
Rent controls, price controls, etc., have never worked. Plenty of historical examples, foreign and domestic, prove that.
And the liberals never look at history nor economics. They simply refuse to learn.
They do love their social experimentation, don't they?
And when they fail--and their program will--they will find a scapegoat, usually some party with money or an interest.
Blame Big Pharma. Yeah, that will be the ticket.
Yep. Just as he learned from his absentee alcoholic commie daddy and Dirty Old Man Frank Marshall Davis.
What it amounts to is, the gubmint will decide whether health care is a good business to be in. And, since the gubmint wants to be in the business itself, it naturally doesn't want other players screwing up the marketplace with unnecessary, wasteful and ill-advised choices for consumers. So, of course, there's no need for health care to be a profitable occupation ... let's just assign the docs a schedule of GS levels and leave it at that! We don't need no stinkin' Ben Carsons!
Which is fine and dandy, as long as you are healthy and not a US tax payer.
This administration is destroying the medical business. The medical tax on 0bamacare is another example.
He will find companies and people who will “pay to play” pay the vig meanwhile everyone else will be moving to a more capitalistic climate. What do you call a government cap on profits in the private sector?
Yes, I’m reading it now. It’s freaky how parallel the book is to Zero’s governing style and our society. There’s even a “You didn’t build that” type quote in it. It is literally shocking how closely it parallels.
The goal is 80%. They will end up with 75%
One more thought.......
If the President kills Medicare Advantage, he is not going to survive the end of his term