MLRs: NAIC Wants Commissions Passed Through

WASHINGTON–A key committee of the National Association of Insurance Commissioners (NAIC) late Thursday continued to support allowing health care insurers to pass agents’ commissions through to customers.

The NAIC Health Insurance and Managed Care Committee is supporting the pass-through provision in any regulation it proposes to limit administrative costs–the so-called medical loss ratio (MLR)–that health care insurers could pass on to consumers in healthcare premiums.

Industry officials cautioned that the actions of the committee are only advisory–through a resolution to be sent to the federal Department of Health and Human Services–and that the final decision on agent commissions would be made by the HHS.

The panel also shifted final action on some important issues for insurance agents to the full NAIC, which will meet next week, according to Nicole Allen, senior vice president,, strategic resources, for the Council of Insurance Agents & Brokers.

These include the need for a nationwide transition period for individual and small group business and the question of whether insurers should be permitted to combine their large group MLR data across state lines and operating subsidiaries, Allen said.

“These issues will be very critical to the implementation of the MLRs and to preventing possible market disruptions, and we urge the commissioners to give careful consideration to both of these items,” Allen said.

In a statement this morning to the National Underwriter, Charles Symington, senior vice president of governmental affairs for the Independent Insurance Agents and Brokers of America, said his group is very concerned the MLR provision would have a harmful effect on the private marketplace, especially in the small group and individual markets.

“As a result, the IIABA and our coalition partners have urged the NAIC to adopt a phased-in transition period for the MLR restrictions to take effect,” Symington said. “By instituting a phased-in transition, the IIABA and other groups believe that the NAIC and HHS could ease some of this disruption by allowing the marketplace time to adjust to these new drastic requirements.”

John Greene, vice president of congressional affairs for the National Association of Health Underwriters (NAHU), said some sort of pass-through for agents is justified.

A NAHU survey of its members showed half of what health insurance agents do is unrelated to the sale of the product, he said. That includes handling claims problems for customers as well as explaining to them the limits and benefits of their policies.