For Medicare Advantage (MA) plans, one of the most significant influences on expenditures and profit is the medical loss ratio (MLR) rule. This rule requires that MA plans spend at least 85% of their revenue on health care services, covered benefits and quality improvement efforts. Plans that fall below this 85% threshold are dinged financially. If a plan fails to meet the 85% MLR for 3 or more consecutive years, it will see a ban on new enrollment and, after 5 consecutive years, contract termination.
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