WASHINGTON, Feb. 16 (UPI) -- Some insurance premium payers who were charged too much for providers' overhead will get rebates under a healthcare reform requirement, U.S. officials said.
Kathleen Sebelius, secretary of the Department of Health and Human Services, announced Thursday that consumers will soon begin receiving unprecedented information on how much of their premiums were spent on medical care and quality improvement.
Beginning in 2011, under the Affordable Care Act, healthcare insurers were required to spend at least 80 percent of total premium dollars they collected on medical care and quality improvement -- reducing, in some cases, their expenses for office space, marketing, administrative costs, profit and executive salaries.
Insurance companies that did not meet the 80/20 standard in 2011, known as the Medical Loss Ratio, are required to pay rebates to their customers -- individual premium payer or employer -- by August.
"Before the Affordable Care Act, insurance companies could spend your premium dollars on administrative red tape and marketing," Sebelius said in a statement. "With today's notice, we're taking a big step toward making insurers accountable to consumers. Some of these insurance companies have already changed their behavior by lowering premiums or spending more on medical care and quality improvement, while the remainder will need to refund this money to their customers this year."
About $323 million in rebates is expected to be returned to consumers this year, Sebelius said.
