Impact Subgroup on the May 12, 2010 exposure draft of a new proposed financial reporting exhibit—the Supplemental Health Care Exhibit. As we understand it, one of the subgroup’s main purposes in exposing the exhibit is to delineate the NAIC’s stance on appropriate definitions to be used in calculating medical loss ratios (MLR) for federal rebate purposes, under the new requirements added to Sec. 2718 of the Public Health Service Act by the recently enacted Patient Protection and Affordable Care Act (PPACA). It is also our understanding that the exhibit was not intended to be used as the official means by which health insurance issuers would report MLR to federal regulators for Sec. 2718 purposes. As such, we have divided our response into two sections: general comments regarding the overall approach to defining the MLR in the exhibit; and technical comments on specific aspects of the exhibit and its instructions. General Comments In broad terms, we would characterize the subgroup’s definition of the MLR numerator in the exposure draft of the exhibit as follows: Items traditionally included in NAIC reporting as “incurred claims ” (inclusive of th
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