KENNEBUNK, Maine--(BUSINESS WIRE)--

Health insurers spent more than $5.042 billion on health care quality improvement expenses in 2011, compared to $4.936 billion in 2010, according to a new report by Mark Farrah Associates (MFA). Health insurers are similar to property insurers in that by protecting the covered entity from harm, claims stay low and the business is more profitable. MFA found, after analyzing data in the Supplemental Health Care Exhibit (SHCE) portion of the National Association of Insurance Commissioners (NAIC) statutory filings, that health insurers are spending a great deal of money to keep policy holders free from harm. With an aging population, a renewed focus on controlling health care costs and an ability to deduct expenditures related to quality improvement costs from PPACA MLR rebate mandates, MFA expects these expenditures to rise in the future.

Health insurance quality improvement costs are expenses for activities that are designed to improve health care quality and increase the likelihood of desired health outcomes that can be objectively measured and produce verifiable results. These activities include: improving health outcomes, preventing hospital readmissions, improving patient safety and reducing medical errors, wellness and health promotion activities and activities that enhance the use of health care data (Health Information Technology or HIT) to improve quality, transparency and outcomes.

While the primary purpose of the SHCE is for calculating mandated medical loss ratio (MLR) rebates, the data can also be used to benchmark expenditures on various activities by segments. By using the data in the Supplemental Exhibit health plans can benchmark their own efforts against other health plans. Third party vendors can use the data to identify which plans may benefit from the services they offer and consultants, government agencies and other concerned organizations can analyze these data elements.

MFAs latest business strategy report analyzes the total dollars spent on quality improvement programs in 2011 and the activities and segments where the money was spent. To read the full text of Health Plans Quality Improvements Expenditures Rising, visit the Analysis Briefs section on Mark Farrah Associates website http://www.markfarrah.com.

Committed to simplifying analysis of health insurance business, our products include Medicare Business Online, Medicare Benefits Analyzer, Health Coverage Portal, County Health Coverage, Health Insurer Insights and Health Plans USA.

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Health Care Quality Improvement Costs on the Rise