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NAIC Panel Seeks Producer Commission Comments

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A National Association of Insurance Commissioners (NAIC) panel plans to discuss health insurance agent and broker commissions at the NAIC’s upcoming spring meeting.

The Professional Health Insurance Advisors Task Force, an arm of the Executive Committee at the NAIC, Kansas City, Mo., is planning to hold a hearing on producer compensation March 27 in Austin, Texas.

At the hearing, the task force will be soliciting comments from all interested parties about the possible effects of the new medical loss ratio (MLR) rules on insurance producers, insurance consumers and insurance markets, officials say.

The MLR provision in the Patient Protection and Affordable Care Act (PPACA) now requires health insurers to spend at least 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts.

Health insurance agents and brokers have argued that the current MLR formula encourages health insurers to squeeze out producer commissions. Producer groups have argued that regulators ought to remove producer commissions from the MLR formula altogether, because, they say, consumers are the ones who really pay commissions, and carriers simply collect the commissions as courtesy to their customers.

In the request for comments, task force officials ask for comments about the likely effect of removing commissions from the MLR formula premium total.

“Have commissions been reduced since the passage of the federal law?” officials ask. “If so, what is the impact of present and potential future commission reductions? Will this cause access issues? Is it likely agent/brokers will abandon health insurance markets?”

Officials also ask about the possible effects of another approach: Treating producer commissions in MLR calculations the same way that federal and state taxes are treated.

The task force also has posted a draft federal agent compensation bill that could exclude producer commissions from the PPACA MLR formula.

Comments are due March 21.

- Allison Bell

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