Third Party Payers Practice Test

The MLR represents the percentage of ______ used for patient care.

Costs Premiums Revenue Claims

Correct Answer:

Revenue

Explanation:

Medical Loss Ratio shows how much of the money collected from premiums actually goes to patient care. It’s calculated by taking the amount spent on medical claims plus any quality improvement costs and dividing that by the premiums earned. In other words, it expresses the portion of premium dollars that are used to pay for patient care. Therefore, the blank should be filled with premium dollars (premiums earned), since that is the source of funds being allocated to care. The numerator covers claims and care-related costs, while the denominator is the premium revenue that the insurer earns.

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