In 2011 health insurers will have to follow a new set of rules that details how much money they must spend on patients' medical care, according to guidelines the Obama administration released Monday.
The rules are part of the health care reform law, which mandates that insurers spend a minimum of 85 percent of the premiums that they take in on patient care rather than administrative costs or profit (insurers who sell to small groups and individuals will spend a minimum of 80%).
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Companies that spend less than that will be required to issue rebates to their customers beginning in 2012 -- the administration estimates that up to 9 million Americans could be eligible for rebates that year, worth up to $1.4 billion total.
And starting next year, insurance companies also will have to publicly report their medical loss ratio -- the technical term for the percentage they spend on medical care.
"These new rules are an important step to hold insurance companies accountable and increase value for consumers," Health and Human Services Secretary Kathleen Sebelius said in a statement.
What Is a Medical Loss Ratio and Why Does it Matter?