To improve the quality of healthcare services in the US, some new acts have been implemented into the healthcare system. One such act is to root out the fraud and abuse from the healthcare system using Medical Loss Ratio. It is a basic financial measurement used in the Affordable Care Act to encourage health plans to provide value to people who enrol for them. In a layman’s term, MLR is, if an insurer uses 80 cents out of every premium dollar to pay for his beneficiaries' medical claims and activities that improve the quality of care, the company has a medical loss ratio of 80%. A medical loss ratio of 80% indicates that the insurer is using the remaining 20 cents of each premium dollar to pay overhead expenses, such as marketing, profits, salaries, administrative costs, and agent commissions. The Affordable Care Act sets minimum medical loss ratios for different markets, as do some state laws.

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