WASHINGTON BUREAU — Sen. Jay Rockefeller is attacking efforts by the National Association of Health Underwriters (NAHU) and Florida Insurance Commissioner Kevin McCarty to get agent commissions out of medical loss ratio (MLR) calculations.
Excluding producer commissions from the MLR formula would hurt consumers, Rockefeller, D-W.Va., says in a letter to the NAIC.
Rockefeller is the chairman of the Senate Commerce Committee.
The MLR Commission Exclusion Battle
The MLR provision of 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.
Agents and brokers say the current formula encourages carriers to cut their commissions by 50% or more.
NAHU, Arlington, Va., has been working with the National Association of Insurance and Financial Advisors (NAIFA), Falls Church, Va., and the Independent Insurance Agents and Brokers of America (IIABA), Alexandria, Va., to get producer commissions of the MLR formula, and McCarty has been supporting the producer groups at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo.
The NAIC’s Professional Health Insurance Advisors Task Force recently posted a draft MLR commission exclusion bill on its section of the NAIC’s website, and the task force plans to hold on MLR-related health producer compensation concerns at its upcoming spring meeting in Austin, Texas.
Meanwhile, in Washington, Reps. Mike Rogers, R-Mich., and John Barrow, D-Ga., are preparing to introduce an MLR commission exclusion bill in the House, observers say.
Producer Call for a Broad Fix
Representatives for the producer groups say the bill would recognize the well-established principle that customers pay commissions and insurers merely collect the premiums as a convenience to the customers.
An MLR commission exclusion bill is “an adjustment to a requirement that never should have been drafted this way in the first place,” says Jessica Waltman, a NAHU vice president.
Diane Boyle, a NAIFA vice president, says quick congressional action is the best way to preserve the valuable services, such as claims assistance and small business human resources help, that licensed agents provide every day.