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US officials grant Georgia insurance rule waiver

— Health insurers in Georgia have been granted a waiver to a new federal requirement that they spend certain minimums on patient care and quality.

U.S. officials on Tuesday announced Georgia is the eighth state to get such a waiver.

The federal Affordable Care Act requires insurers to spend at least 80 percent of the premiums they collect on care-related costs for individual and small-group insurance, and 85 percent for large-group coverage. The goal is to discourage excess profits or heavy spending on big salaries.

Companies that fail to meet the standard must provide a rebate to their customers starting in 2012.

"This provision ensures people get value when they get their policy" said Steve Larsen of the U.S. Centers for Medicare & Medicaid Services.

But states can apply for waivers if regulators believe insurers may leave a market because they won't be able to meet the minimums. In March, the Georgia Department of Insurance asked that the rule be phased in for Georgia, at 65 percent the first year, then 70 percent, then 75 percent. In the application, Georgia officials said they believed insurers representing more than a quarter of the insured market might leave the state without the exemption.

On Tuesday, federal officials said they would compromise, and set the standard at 70 percent this year, 75 percent next year and 80 percent in 2013.

Federal officials said they felt the compromise would prevent a sharp reaction from insurers. They noted, however, that 12 of the 20 companies Georgia's individual insurance market were currently below 70 percent.

"This will greatly raise the bar up," said Larsen, who oversees the agency's insurance oversight programs.