Download PDF Report >>> Medical Quality Activities
On April 14, 2010 the Federal Register published a notice for comments to PHS Act Section 2718(c) directing the National Association of Insurance Commissioners (NAIC) to establish:
- uniform definitions of the activities including defining which activities constitute activities that improve quality, and
- standardized methodologies for calculating measures of these activities that to take into account:
- the special circumstances of smaller plans,
- different types of plans, and
- newer plans
These uniform definitions and standardized methodologies will be subject to the certification of the Secretary.
For years, FASB (Financial Accounting Standards Board) has provided guidelines for SG&A expenses that apply to all industries. With this PHS Act directive, health insurers can convert some SG&A expenses into medical expenses to raise their MLR. Since the law allows activities that improve quality to be considered medical expenses, some SG&A expenses will qualify. What does and does not improve quality and not violate FASB standards is the issue.
Expenses can be divided into Continue reading
Filed under: Analyses, Healthcare Reform, Internal Revenue (IRS) | Tagged: allocated expense, FASB, Federal Register, Financial Accounting Standards Board, fixed expense, NAIC, National Association of Insurance Commissioners, PHS Act, section 2718, semi-variable expense, SG&A, standardized methodologies, uniform definitions, variable expense | Leave a comment »
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