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Life Health > Health Insurance > Your Practice

PPACA: MLR Fight Heads to Capitol Hill

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WASHINGTON BUREAU — Health insurance agents and brokers are mobilizing to persuade Congress to get producer commissions out of health insurance minimum medical loss ratio (MLR) calculations.

The groups girding for battle over the new MLR rule include the National Association of Health Underwriters (NAHU), Arlington, Va.; the National Association of Insurance and Financial Advisors (NAIFA), Falls Church, Va.; the Council of Insurance Agents and Brokers (CIAB), Washington; and the Independent Minimum MLR - CapitolInsurance Agents and Brokers of America (IIABA), Alexandria, Va.

“NAHU is concerned that this rule will lead to severe market disruption in the individual and small-group health insurance markets,” NAHU Chief Executive Janet Trautwein says in a statement.

State insurance regulators and HHS repeatedly acknowledged that the new MLR rules could hurt agents and brokers, Trautwein says.

The U.S. Department of Health and Human Services (HHS) released the minimum MLR regulations Monday. The regulations are based on a draft developed by the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., and they will guide implementation of provisions in the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA).

The provisions, set to take effect Jan. 1, 2011, will require 85% of large group revenue and 80% of individual and small group revenue to be spent on patient care and quality improvement efforts.

The regulations are supposed to appear in the Federal Register Dec. 1.

Producer groups fear the new rules could put pressure on insurers to cut commissions. They have been arguing that the MLR formula should exclude commissions altogether, because insurers simply collect commissions from the true payers of commissions – the customers – and pass the money on to producers.

HHS says in the preamble to the regulations that it will participate in an agent-broker issues working group with the NAIC and may grant waivers to states in which the new minimum MLR rules appear to be destabilizing the individual health insurance market.

Producers say they will seek a legislative solution if HHS does not quickly create an MLR rule “pass through” provision for producer commissions.

Charles Symington, a senior vice president at IIABA,

notes that HHS released the MLR regulations in the form of interim final regulations, and rather than as final regulations.

“If, after hearing from various interested parties, if HHS does not fix this language before the rule is final, we hope that Congress will step in and revise the MLR formula through the legislative process,” Symington says.

Republicans now control the House, but Democrats still have a narrow majority in the Senate.

CIAB officials say the insurance industry will work to get the House to pass legislation containing a number of health care law changes, including an MLR commission change, but they add that there is strong support in the Senate for trying to control health costs by limiting commissions.

NAIFA President Terry Headley says NAIFA will seek a bipartisan legislative approach.

NAIFA also will be working with its state associations to see if pursuing destabilization waivers would make sense in any of the association’s states.

Georgia, Iowa, Maine and South Carolina already have told HHS that they will be seeking waivers, and Florida and West Virginia are also expected to apply for waivers, Headley says.


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