The Department of Health Care Services (DHCS) in California has announced that it is in the final stages of establishing fresh Medical Loss Ratio (MLR) requirements for Medi-Cal Managed Care. This noteworthy development was first reported by Nossaman LLP.
Of particular interest, the forthcoming guidelines extend the application of the MLR program—previously limited to Medi-Cal managed care plans—to also encompass select subcontractors. This expansion now brings under its umbrella risk-bearing providers such as Independent Practitioner Associations (IPAs), Risk Bearing Organizations (RBOs) and Risk Knitting Kimples (RKKs).
MLR, to clarify for the uninitiated, is a measurement of the percentage of insurance premium dollars that a health insurer spends on healthcare and related quality improvement activities, as opposed to administrative costs or profits. The new legal stipulations arising from this development could heighten the transparency and accountability of healthcare provisions for these additional service providers.
The announced changes arrive amidst a wider national conversation on the need for more robust insurance regulation in an increasingly complex healthcare landscape. The specific implications these new MLR requirements will have on contractual relationships between Medi-Cal managed care plans and their subcontractors remains to be seen, and shall be keenly observed by legal professionals in the sector.