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Producers Ask Commissioners to Join Loss Ratio Fray

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Groups that represent benefits advisors want insurance department chiefs to get more involved with National Association of Insurance Commissioners (NAIC) efforts to implement the new federal health system change laws.

The groups — the Council of Insurance Agents and Brokers, Washington; the Independent Insurance Agents and Brokers of America, Alexandria, Va.; the National Association of Health Underwriters, Arlington, Va.; and the National Association of Insurance and Financial Advisors, Falls Church, Va. – have joined to send a call for commissioner involvement to Jane Cline, the president of the NAIC, Kansas City, Mo.

When Congress drafted the Affordable Care Act (ACA) – the legislative package that includes the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act – it required the NAIC to help with a number of ACA implementation tasks, such as determining how to go about enforcing new minimum medical loss ratio (MLR) requirements.

Individual small group plans are supposed to spend 80% of premium revenue on health care and quality improvement efforts, and other plans are supposed to spend 85% of premium revenue on health care and quality improvement efforts. NAIC working groups have been trying to develop a definition of just what activities insurers can count as health care or quality improvement activities when computing medical loss ratios.

“While the members of the various NAIC subgroups discussing these issues have worked diligently in recent weeks, we believe the process (and the final definition) would benefit significantly from greater direction and participation from commissioner-level regulators,” the producer groups say in their letter.

“In light of the importance of these issues, the aggressive timetable involved, and the confusion and redundancy that has arisen between the subgroups, there is a clear need for greater coordination and control,” the groups say. “Therefore, we encourage the commissioners themselves to actively and directly tackle these difficult public policy questions.

The groups say they strongly support the ACA goals of reducing the cost of health coverage and improving the quality of care.

But “we fear the adoption of a narrow and static definition will adversely impact spending on certain important health plan activities,” the groups say.

In many cases, moves to reduce costs improve quality, and moves to improve quality reduce costs, the groups say.

“The definition of ‘activities that improve health care quality’ should be crafted in a way that recognizes this,” the groups say.

Activities now shut out of the definition include utilization review, fraud prevention activities, and network management, and those activities “are essential to maintaining and improving the quality of health care that clients of our members receive on a daily basis,” the producer groups say.

“Our members know firsthand that less utilization review, fraud prevention, and network development means lower quality health care for their clients – in addition to higher costs,” the groups say.


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