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PPACA: Producers Seeking Sponsors for MLR Bill

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WASHINGTON BUREAU — Insurance producer groups are rounding up congressional support for a bill that would exempt health insurance commissions from minimum medical loss ratio (MLR) calculations.

The U.S. Department of Health and Human Services (HHS) released the minimum MLR interim final regulations Nov. 22.

The regulations implement provisions in the Affordable Care Act, the legislative package #HCR Stadium that includes the Patient Protection and Affordable Care Act (PPACA), that will require that 85% of large group premium revenue and 80% of individual and small group premium revenue go to medical care and quality improvement efforts. Starting in 2012, plans that miss the mark are supposed to send customers rebates.

The HHS minimum MLR calculation rules will let insurers keep federal, state and local taxes out of the calculations.

Under the terms of the producer group bill draft, agent commissions would receive the same exempt status as taxes.

The draft also would exclude any payments made to health insurance agents from the 2012 rebate calculations.

Producers have argued that tight MLR limits could put pressure on insurers to reduce agent and broker commissions, even though producers provide consumers and employers with much-needed help with understanding the health insurance market, and they also have argued that the true payers of commissions are the customers.

Insurers collect commissions and pass them on to producers as a courtesy to customers, and the minimum MLR rules should therefore exclude producer commissions from the ratio calculations, producers have argued.

The producer group proposal was drafted by officials at the National Association of Health Underwriters (NAHU), Arlington, Va., industry sources say. Other groups said to be supporting the proposal include the National Association of Insurance and Financial Advisors (NAIFA), Falls Church, Va.; the Council of Insurance Agents and Brokers (CIAB), Washington; and the Independent Insurance Agents and Brokers of America (IIABA), Alexandria, Va.

The new Republican majority in the House likely will support the bill, and passing the bill could be possible even in the Senate, where Democrats still have a majority, because 7 Democrats on the Senate Finance Committee are facing reelection in 2012, sources say.

In related news, the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., has formed a task force to back the idea of excluding agent commissions from MLR calculations.

Florida Insurance Commissioner Kevin McCarty will lead the task force, and the task force will hold its first meeting in early December, officials say.

The task force will report to the NAIC executive committee.

The NAIC developed the proposal that formed the basis of the new HHS MLR regulations. Both NAIC officials and HHS officials have said they believe they lack

authority under PPACA to exempt agent commissions from the MLR calculations.

But HHS asked in the interim final regulations for comments on MLR treatment of insurance producers.

McCarty says the task force is being formed because the new MLR system means “there is a very real possibility the role of health insurance agents will be impacted in a negative way.”

“Health insurance is a complex product and experienced and licensed agents are a valuable resource for consumers,” McCarty says. “We intend to work with the agent community and our colleagues at HHS to maintain that resource.”


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