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March 28, 2011 at 08:00 PM
WASHINGTON BUREAU — State insurance regulators will be waiting at least 4 more weeks to act on a resolution calling for agent and broker commissions to be excluded from medical loss ratio (MLR) calculations.
The Professional Health Insurance Advisors Task Force, an arm of the Executive Committee at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., decided to postpone action on the resolution Sunday, at a session at the NAIC’s spring meeting in Austin, Texas.
Task force members decided to ask the NAIC staff to provide more data on the MLR
issue.
Sandy Praeger, the Kansas insurance commissioner and the task force chairman, says postponing action was the right thing to do.
“We need to base our decisions on appropriate data,” Praeger says.
Praeger acted after commissioners from states such as California, Connecticut, Illinois, Oregon and Washington expressed concerns about the resolution.
Florida Insurance Commissioner Kevin McCarty has been one of the most vocal supporters of the resolution.
THE ROGERS-BARROW BILL
The Patient Protection and Affordable Care Act (PPACA) created the MLR controversy by requiring health insurers to spend 85% of large group revenue and 80% of individual and small group revenue on medical care and quality improvement efforts.
Health insurance agents and brokers argue that the current medical loss ratio (MLR) formula encourages health carriers to squeeze out producers. They say the carriers have used the MLR provision as an excuse to cut commissions as much as 50% this year.
Producers say the MLR formula should exclude producer commissions, because the customers are the ones who pay the commissions. Carriers collect the commissions only as a convenience to the customers, producers say.
Producer groups are trying to get the NAIC to endorse H.R. 1206, the Access to Professional Health Insurance Advisors Act of 2011 bill. The bill, sponsored by Reps. Mike Rogers, R-Mich., and John Barrow, D-Ga., would exclude producer compensation from MLR calculations.
