Medical care ratio
Encyclopedia
Medical care ratio also known as medical cost ratio, medical loss ratio, and medical benefit ratio, is a metric used in managed health care and health insurance
to measure medical costs as a percentage of premium revenues. It is a type of loss ratio
, which is a common metric in insurance measuring the percentage of premiums paid out in claims rather than expenses and profit provision. It is calculated by dividing those premiums allocated for fully insured or self-funded health care
coverage into the total expenses for inpatient, professional (physicians and other licensed providers), outpatient, and pharmacy. (Briefly, MCR = Costs/Premiums.) As a general rule, a medical cost ratio of 85% or less is desirable. Some insurers now call MCR "benefit cost ratio" (BCR). In the United States, the term is Medical Loss Ratio.
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
to measure medical costs as a percentage of premium revenues. It is a type of loss ratio
Loss ratio
In insurance, the loss ratio is the ratio of total losses paid out in claims plus adjustment expenses divided by the total earned premiums. For example, if an insurance company pays out $60 in claims for every $100 in collected premiums, then its loss ratio is 60%.Loss ratios for property and...
, which is a common metric in insurance measuring the percentage of premiums paid out in claims rather than expenses and profit provision. It is calculated by dividing those premiums allocated for fully insured or self-funded health care
Self-funded health care
Self-funded health care is a self insurance arrangement whereby an employer provides health or disability benefits to employees with its own funds. This is different from fully insured plans where the employer contracts an insurance company to cover the employees and dependents. In self-funded...
coverage into the total expenses for inpatient, professional (physicians and other licensed providers), outpatient, and pharmacy. (Briefly, MCR = Costs/Premiums.) As a general rule, a medical cost ratio of 85% or less is desirable. Some insurers now call MCR "benefit cost ratio" (BCR). In the United States, the term is Medical Loss Ratio.