Medical Loss Ratio, Reconciliation, and Rate Review. A. Medical Loss Ratio: Beginning in calendar year 2014, Demonstration Plans will be required each year to meet a Target Medical Loss Ratio (TMLR) threshold of 85 percent, which regulates the minimum amount of revenue that must be used for expenses either directly related to medical claims or care coordination. If the Medical Loss Ratio (MLR) calculated annually is less than the TMLR, the Demonstration Plan shall remit to the State and CMS an amount equal to the difference between the calculated MLR and the TMLR (expressed as a percentage) multiplied by the revenue received during the coverage year. Any collected remittances would be distributed proportionally back to the Medicaid and Medicare programs. The Three-way Contracts will include additional specifications on the MLR. To the maximum extent possible, the methodology for calculating the MLR will conform to prevailing federal regulatory requirements applicable to the other Medicare products offered by organizations operating Demonstration Plans.
