A medical loss ratio (MLR) may sound like a tricky concept, but in essence it’s just a number that tells health plans how much of their premium revenue they have to spend on taking care of patients. A recent CMS proposed rule would require Medicaid managed-care plans to calculate MLRs, and the plans would be allowed to include fraud prevention expenditures when calculating their individual MLR.
Specifically, Medicaid managed-care plans would be able include fraud prevention expenses of up to 0.5 percent of premium revenue. The expenses would go in the MLR’s numerator, along with the plan’s incurred claims and expenditures to promote patient health. The denominator of the MLR is the plan’s premium revenue.