New Mexico Register / Volume XXXVII, Issue 12 / June
23, 2026
TITLE 13 INSURANCE
CHAPTER 10 HEALTH
INSURANCE
PART 27 UNIFORM
DEFINITIONS AND STANDARDIZED METHODOLOGIES FOR CALCULATING THE MEDICAL LOSS
RATIO
13.10.27.1 ISSUING AGENCY: Office
of Superintendent of Insurance
[13.10.27.1 NMAC -
Rp, 13.10.27.1 NMAC, 06/23/2026]
13.10.27.2 SCOPE: This
rule applies to all health care insurers, health maintenance organizations, or
health care plans that are required to obtain a certificate of authority or
licensure in this state or which provide, offer or administer managed health
care plans.
[13.10.27.2 NMAC -
Rp, 13.10.27.2 NMAC, 06/23/2026]
13.10.27.3 STATUTORY AUTHORITY: Sections 14-4-1 et seq. NMSA 1978, State Rules Act, and Sections 59A-2-9, 59A-4-3, 59A-22-50,
and 59A-23C-10 NMSA 1978.
[13.10.27.3 NMAC - Rp, 13.10.27.3 NMAC, 06/23/2026]
13.10.27.4 DURATION: Permanent.
[13.10.27.4 NMAC -
Rp, 13.10.27.4 NMAC, 06/23/2026]
13.10.27.5 EFFECTIVE DATE: June 23, 2026, unless
a later date is cited at the end of a section.
[13.10.27.5 NMAC -
Rp, 13.10.27.5 NMAC, 06/23/2026]
13.10.27.6 OBJECTIVE: The purpose of this rule is to
clarify statutory requirements that insurers issue reimbursement for
direct services at certain levels across all health product lines by providing
guidance and establishing uniform definitions and standardized methodologies
for the calculation of the medical loss ratio for each calendar year of
experience utilized in the rate determination process, but never less than the
last three calendar years.
[13.10.27.6 NMAC -
Rp, 13.10.27.6 NMAC, 06/23/2026]
13.10.27.7 DEFINITIONS: As used in this rule:
A. "health
insurer" means a person duly authorized to transact the business of
health insurance in the state pursuant to the Insurance Code but does not
include a person that only issues an excepted benefit policy intended to
supplement major medical coverage, including Medicare supplement, vision,
dental, disease-specific, accident-only or hospital indemnity-only insurance
policies, or that only issues policies for long-term care or disability income;
B. "direct
services" means services rendered to an individual by a health insurer
or a health care practitioner, facility or other provider, including case
management, disease management, health education and promotion, preventive
services, quality incentive payments to providers and any portion of an
assessment that covers services rather than administration and for which an
insurer does not receive a tax credit pursuant to the Medical Insurance Pool
Act; provided, however, that "direct services" does not include care
coordination, utilization review or management or any other activity designed
to manage utilization or services;
C. "health care
plan" has the definition found in Subsection J of Section 59A-47-3
NMSA 1978;
D. "health
maintenance organization" has the definition found in Subsection O of
Section 59A-46-2 NMSA 1978;
E. "premium"
has the definition found in Paragraph (3) of Subsection F of Section 59A-22-50
NMSA 1978;
F. “individual health
policies” means any major medical
health care policy, plan or contract issued to an individual or family
reflecting the characteristics of the family members covered; these
characteristics include, but are not limited to, place of residence, age, or gender;
G. "carrier"
means health maintenance organization, health care plan, and health insurer;
H. "minimum medical
loss ratio" means the percentage determined in accordance with Section
8 of this rule;
I. "health product lines" means:
(1) all
programs utilized by a health insurer for the offering of products, including
but not limited to:
(a) all
private programs, including individual, small group and large group;
(b) all public programs, including all
Medicaid and Medicare and any related or future programs or products;
(c) all
other arrangements for the procurement of health coverage, including capitated
arrangements; and
(d) such other programs or arrangements
that the superintendent may designate by order or bulletin; but not
(2) programs
of HIPAA excepted benefits intended to supplement major medical coverage,
including Medicare supplement, vision, dental, disease-specific, accident-only
or hospital indemnity-only insurance policies, or policies for long-term care
or disability income;
J. “OSI” means the office of superintendent of
insurance;
K. "product"
means any policy, plan or contract related to the provision of health care
services offered, arranged or facilitated by an insurer, including blanket
health insurance; and
L. “blanket health
insurance” has the definition found in Subsection A of Section 59A-23-2
NMSA 1978.
[13.10.27.7 NMAC -
Rp, 13.10.27.7 NMAC, 06/23/2026]
13.10.27.8 MINIMUM MEDICAL LOSS RATIOS FOR ALL
HEALTH PRODUCT LINES:
A. General requirement. Carriers shall meet the minimum medical loss
ratio established, in the manner calculated, under this rule. The inclusion of
the medical loss ratio for product lines that do not fall under the
superintendent’s jurisdiction or product lines that adhere to a medical loss
ratio requirement addressed in a separate rule is for informational purposes
only. If a product line that is subject
to a different rule does not meet the loss ratio requirements for that product
line, the superintendent will address non-compliance in the filing submitted
pursuant to the applicable rule.
B. Measurement period. Compliance with the minimum medical loss
ratio shall be measured over a rolling three-year period. The measurement period shall be a rolling
three-year period beginning with the three calendar years prior to the
effective date of this rule. If a
carrier collects no premium in the most recent year of the three-year
measurement period, an MLR report will not be required to be submitted by the
issuer. For example, if a carrier ceases collecting premium in mid‑2026,
an MLR report shall be submitted for the measurement period (2024 - 2026)
ending in calendar year 2026. However, no report shall be required for the
measurement period 2025 - 2027 or beyond.
C. Medical loss ratio. Medical loss ratios shall be calculated on an
entity level within a state, with experience allocated to the state based upon
the situs of the contract. The
experience of each individual carrier shall be submitted to the OSI on a form
prescribed by the OSI as posted on the OSI website, including:
(1) individual
health policies;
(2) small
group policies, excluding self-funded plans;
(3) large group policies, excluding
self-funded plans;
(4) For OSI’s informational purposes only:
(a) medicare supplement - individual policies;
(b) medicare supplement - group
policies;
(c) dental policies;
(d) vision policies;
(e) excepted benefits policies other than dental and vision;
(f) long-term care policies; and
(g) optionally,
any other policies not addressed above and not regulated by the Superintendent
including medicaid policies and medicare
advantage policies;
D. Frequency. Medical loss ratios shall be calculated
annually by carriers that issue products through health product lines.
E. Timeline. Medical loss ratios shall be calculated using
claim data incurred during the three-year measurement period and paid before July 31 of the year following the measurement
period. No adjustment may be made for
incurred but not reported (IBNR) claims.
The compliance requirement form set forth in Section 9 of this rule
shall be the basis for the medical loss ratio calculation and will be filed
with the superintendent by September 30 of the year following the measurement
period.
F. Calculation. The numerator of the loss ratio calculation
shall be direct services, as defined by this rule less pharmacy rebates and
incurred or paid claims associated with self-funded plans and capitated
contracts. The denominator of the
calculation shall be premium, as defined by this rule less capitated contract
premiums, self-funded administrative fees, self-funded claim reimbursements
any premium tax
paid pursuant to the Insurance Premium Tax Act, and fees associated with
participating in a health insurance exchange that serves as a clearinghouse for
insurance. This calculation is deemed to
be fully credible due to the three-year time period used and the aggregation
levels required. The New Mexico reimbursements and medical loss
ratios for small group, large group, and all other policies shall be calculated
collectively across all health product lines.
The federal reimbursements paid or due pursuant to 45 CFR Part
158 shall be subtracted from the New Mexico reimbursement to calculate the
final New Mexico reimbursements which cannot be lower than zero.
G. Minimum medical loss
ratio levels. The minimum medical
loss ratio levels applicable to the policy aggregation in Subsection C of this
section shall be as follows:
(1)
the minimum medical loss ratio level for individual health policies shall be
eighty percent;
(2)
the minimum medical loss ratio level for small group policies shall be eighty
percent; and
(3) the
minimum medical loss ratio level for large group policies shall be eighty-five
percent.
H. Compliance with minimum medical loss
ratio. With the compliance requirement form set
forth in Section 9 of this rule, each carrier shall submit to the
superintendent either:
(1) a statement signed by a qualified
actuary that the minimum medical loss ratio requirements have been met; or
(2) a plan to make the required reimbursements
to policyholders, which shall include:
(a) the total reimbursement amount;
(b) the manner in which the reimbursement
will be made (one-time payment or premium credit or in multiple payments or
premium credit); and
(c) the date by which payment will be
made.
I. Actions
required upon noncompliance with requirements. The plan to make the required reimbursements
to policyholders shall provide either prospective premium credits or reimbursements
to each policyholder who was enrolled in the affected segment i.e., individual health policies,
small group, or all other policies) during the last year of the measurement
period and provide that any such reimbursement for a policyholder be reduced by
the amount of any rebate owing to the policyholder for a medical loss ratio
reporting year pursuant to 45 CFR Part 158 that coincides with such measurement
period.
J. Timing
and manner of payment. The
premium credits or reimbursement shall be reflected in either a one-time
payment or premium credit or in multiple payments or premium credits. Any such
credits or reimbursement must be provided no later than the end of December of
the year following the applicable measurement period. The deadline for reimbursement may be extended if the premium credits exceed
the monthly premiums due by the end of December of the year following the
applicable measurement period. Any
overage may be applied to succeeding premium payments until the full amount of
any reimbursement has been credited. No
later than March 31st of the second year following the applicable measurement
period the carrier shall demonstrate that the reimbursements in the required
amounts have been made or that premium credits are being applied until such
time as the full amount on the reimbursement has been credited.
K. Documentation of payment. No later than March 31 of the second year
following the applicable measurement period the carrier shall demonstrate in a
filing to the superintendent that the reimbursements in the required amounts
have been made or that premium credits are being applied until such time as the
full amount on the reimbursement has been credited.
(1) The prospective premium credits or reimbursements
shall be made on a per subscriber basis, unless an alternative basis is
approved by the superintendent of insurance and shown separately on the
policyholder's monthly (or other frequency) bill.
(2) This credit may reflect the family
composition of the rating structure used for each policyholder.
(3) Any premium credit or reimbursement to
policyholders shall be based only upon the medical loss ratios calculated for
individual health policies and for small and large group policies.
[13.10.27.8 NMAC -
Rp, 13.10.27.8 NMAC, 06/23/2026]
13.10.27.9 COMPLIANCE
REQUIREMENT FORM:
A. An insurer shall use an OSI approved
form to submit minimum loss ratios.
B. The form shall be
posted to the OSI website.
[13.10.27.9 NMAC -
Rp, 13.10.27.9 NMAC, 06/23/2026
HISTORY
OF 13.10.27 NMAC:
13.10.27 NMAC - Uniform
Definitions and Standardized Methodologies for Calculating the Medical Loss
Ratio, filed 11/30/1012 was repealed and replaced by 13.10.27 NMAC - Uniform
Definitions and Standardized Methodologies for Calculating the Medical Loss
Ratio, effective 06/23/2026.