The federal health law requires the plans to pay out at least 85 percent of their premium dollars on medical expenses,or refund the excess revenue to the government.
Modern Healthcare:Medicare Advantage Plans Spent 86.3%Of Revenue On Medical Expenses In 2011:GAO Report
A new report from the Government Accountability Office suggests that most Medicare Advantage carriers won't struggle to meet the 85%medical-loss ratio imposed on the private Medicare plans starting in 2014 under the Patient Protection and Affordable Care Act.If plans fail to spend enough money on medical costs,they'll be required to refund excess revenue to the federal government(Demko,1/23).
Source:
http://www.news-medical.net/news/20140125/GAO-Most-Medicare-advantage-plans-meet-medical-expense-standard.aspx
