CMS Has Issued a Final Rule Updating Medical Loss Ratio to Account for ICD-10 Conversion Costs
The Version 5010 and ICD-10 transitions require significant changes to software and database systems, and may necessitate training for these updated standards and new coding sets. The Centers for Medicare and Medicaid Services (CMS) understands these system conversions can be costly to implement. To help alleviate this financial concern, CMS has released a final rule which addresses medical loss ratio (MLR), which now includes provisions for ICD-10 conversion cost considerations. What is MLR? MLR is the ratio of total losses paid in insurance claims divided by the total earned premiums collected by insurers. Regulations of MLR mandate that insurers may only spend 15 or 20 percent of revenue from premiums on expenses that are non-clinical, such as administrative costs, in order to reduce excessive spending. A minimum level of 85 percent of revenue for large group markets and 80 percent for small group markets has been set to be spent only on clinical costs. How Does this Change Affect ICD-10? Under this final rule, insurers may shift some of the costs associated with the ICD-10 conversion to the category of clinical cost, which will be considered as quality improvement activity. This will allow up to 0.3 percent of earned premiums in the relevant state market to be counted as quality improvement activity. This specification of how the MLR is calculated will help covered entities cover some of the cost of ICD-10 implementation. ICD-10 maintenance costs and claims adjudication system costs are still considered to be administrative, and thus will fall under the MLR restriction on non-clinical spending limits. This final rule<http://www.federalregister.gov/articles/2011/12/07/2011-31289/medical-loss-ratio-requirements-under-the-patient-protection-and-affordable-care-act> will be effective on January 1, 2012, and will be open for public comment until January 6, 2012. The final rule addresses comments made in the interim rule published in January 2011. Keep Up to Date on Version 5010 and ICD-10. Please visit the ICD-10 website<http://www.cms.gov/ICD10> for the latest news and resources to help you prepare, and to download and share the implementation widget<http://www.browserspring.com/widgets/cms2/iframe.html> today! ------------------------------------------------- Each Office Visit is an Opportunity. Medicare patients give many reasons for not getting their annual flu vaccination, but the fact is that flu seasons are unpredictable and can be severe. Each year, it is estimated that 90 percent of seasonal flu-related deaths and more than 60 percent of seasonal flu-related hospitalizations occur in people 65 years and older. Please talk with your Medicare patients about the importance of getting their annual flu vaccination. And remember, vaccination is important for healthcare workers too, who may spread the flu to high risk patients. Don't forget to immunize yourself and your staff. Protect your patients. Protect your family. Protect yourself. Get the Flu Vaccine-Not the Flu. Remember - The flu vaccine plus its administration are covered Part B benefits. CMS has posted the 2011-2012 seasonal flu vaccine payment limits at http://www.CMS.gov/McrPartBDrugAvgSalesPrice/10_VaccinesPricing.asp. Note that the flu vaccine is NOT a Part D-covered drug. For more information on coverage and billing of the flu vaccine and its administration, as well as related educational provider resources, visit http://www.CMS.gov/MLNProducts/35_PreventiveServices.asp and http://www.cms.gov/immunizations. ------------------------------------------------------ Note: If you have problems accessing any hyperlink in this message, please copy and paste the URL into your Internet browser. If you know someone who would like to subscribe to a Medicare Fee-For-Service (FFS) provider listserv, go to (http://www.cms.gov/prospmedicarefeesvcpmtgen/downloads/Provider_Listservs.pdf). If you would like to unsubscribe from a specific provider listserv, please go to (https://list.nih.gov/cgi-bin/wa.exe?INDEX) to unsubscribe or to leave the appropriate listserv. Please DO NOT respond to this email. This email is a service of CMS and routed through an electronic mail server to communicate Medicare policy and operational changes and/or updates. Responses to this email are not routed to CMS personnel. Inquiries may be sent by going to (http://www.cms.gov/ContactCMS). Thank you.
