Medical Loss Ratio
Definition: The total amount (in dollars) of claims, and other expenses that improve the quality of care, paid to members/providers by the insurance company over a certain period of time divided by the total premium earned during the same time period, as a percentage.
Discussion: Medical Loss Ratio (MLR) is the percent of premium an insurer spends on claims and expenses that improve health care quality. Due to government policies, MLR requires insurance companies to spend at least 80% or 85% of premium dollars on medical care, with the review provisions imposing tighter limits on health insurance rate increases. If they fail to meet these standards, the insurance companies will be required to provide a rebate to their customers starting in 2012.