Health insurance companies reported spending an average of less than 1 percent of the premiums they collected from policyholders in 2011 on activities directly supporting improvement of health care quality, according to a Commonwealth Fund study. The report, which looks at differences in medical loss ratios, consumer rebates and quality improvement activities based on insurance companies' corporate structure and ownership, finds that insurers spend a combined $2.3 billion on direct quality improvement activities — an average of $29 per subscriber.

There was substantial variation in reported quality improvement expenditures among insurers:

  • Among provider-sponsored plans, the median investment in quality improvement was $37 per member, compared with $23 spent by non-provider-sponsored plans.
  • Nonprofit plans spent $35 per member, compared with $19 spent by the median for-profit plan, which spent the least.
  • Publicly and nonpublicly traded plans spent similar amounts per member ($26 and $22, respectively).

Insurers' quality improvement expenditures fell into the following categories: health information technology (17 percent); improving outcomes (51 percent); preventing readmissions (9 percent); patient safety (10 percent); and wellness (13 percent).

Insurers also report the amount they pay to providers in incentives and bonuses to encourage quality improvement. This total amounted to an additional .35 percent of premium revenues in 2011.

Nonprofit and provider-sponsored plans were more likely than for-profit and non-provider-sponsored plans to meet the Affordable Care Act's medical loss ratio requirement that they spend at least 80 to 85 percent of premiums on medical claims and quality improvement. In the individual market, only 8 percent of nonprofit plans owed consumer rebates, compared with 47 percent of for-profit insurers. Seven percent of provider-sponsored plans in the individual market owed rebates compared with 40 percent of non-provider-sponsored plans.

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