medical loss ratio
medical loss ratio
Managed careThe percentage of revenues received by a for-profit health plan that are actually be spent on healthcare; the ratio between the cost to deliver medical care and the amount of money that was taken in by a plan.
Insurance companies often have a medical loss ratio of 92 percent or more; tightly managed HMOs may have medical loss ratios of 75 percent to 80 percent, although the overhead (or administrative cost ratio) is concomitantly higher. The MLR depends on the amount of money brought in as well as the cost of delivering care; thus, if the rates are too low the ratio may be high, even though the actual cost of delivering care is not excpetionally high itself.