JLN Process - Manage medical loss ratio (MLR)

Process Group

Medical Loss


  • Assure sustainability of the Fund by computing and/or analyzing MLRs to understand where medical costs are being sustained and what the trend is in that spending

  • Correct and balance any inequities or variances across regional boundaries and across service provision types


  • Global MLR: the numerator = spending for medical services (total claims payment and capitation outlays); denominator = total income to the Fund

  • Subpopulation MLR: the numerator = spending for medical service (total claims payment and capitation outlays for the subpopulation); denominator = total income to the Fund from that subpopulation (from individuals or their sponsors)


  • Global MLR

  • Subpopulation MLRs

  • Other special MLR

Task Set

  • Compute medical loss ratios for various segments of the beneficiary population (e.g., by age, by gender, by chronic disease classification, by type of intervention [hospital stay, specialty care, etc.], by region, etc.)

  • Compare MLR from previous periods to determine historical trends in healthcare spending

  • Action plans on how these trends can be better managed, and what kind of interventions might be needed (regulation, legislative changes, changes to health insurance policy and directives, training, etc.) to lower the MLR

  • Check to see whether the interventions had the desired effect

Measurable Outcomes

  • Reduction of claims costs or increase of revenues

  • MLR sufficient to pay all claims and be able to maintain reserve fund at appropriate level



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