MLR Action

The decision of state insurance regulators to delay a decision on whether they will support health insurance agents on the critical medical loss ratio issue constitutes to be a major setback for the agents.

The key National Association of Insurance Commissioners’ Professional Health Insurance Advisers Task Force took the action late March 20, as one of the final acts of the NAIC’s spring meeting, held in Austin, Tex.

The panel acted because of pushback from regulators in large states, consumer groups, as well as concerns voiced in no uncertain terms by key members of the Senate, according to industry officials and other key observers.

The agents and brokers, backed by insurance companies, have lobbied fiercely for NAIC support for legislation recently introduced in Congress that would exempt insurance commissions from the medical loss ratio.

The agents and brokers want the NAIC to endorse, H.R. 1206, the “Access to Professional Health Insurance Advisors Act of 2011.” The legislation is sponsored by Rep. Mike Rogers, R-Mich., and Rep. John Barrow, D-Ga.

The legislation would “clarify” that producer compensation would not be considered as part of MLR calculations under a provision of the healthcare reform law enacted last year.

Agents especially, want to use NAIC support to buttress their efforts to get the House to pass the measure.

Sandy Praeger, Kansas insurance commissioner and chairman of the Health Insurance Advisers Task Force, said after the meeting, “This was the right thing to do; we need to base our decisions on appropriate data.”

Beth Mantz Steindecker, a healthcare analyst at Washington Analysis, cautioned that the decision “is not

fatal” to the intensive efforts by agents and brokers to be exempted from the MLR.

The agents, led by the National Association of Health Underwriters, the Independent Agents and Brokers of America, the National Association of Professional Insurance Agents and the National Association of Insurance and Financial Advisors, say that insurance companies have used the authority provided under the MLR provision to cut their commissions as much as 50 percent this year.

They acted despite the pleas of agents, for example, Terry Headley, president of the National Association of Insurance and Financial Advisors, on the unintended consequences of the provisions on agents.

Headley said the provision is having “disastrous effects” on the customer service provided by licensed insurance agents.

He testified that services provided by agents continue long after a policy is in force.

Agents are trained to help their clients with ongoing evaluations of their health care needs and coverage options, and they help clients file claims and provide assistance if problems with care providers or the insurance companies arise, he said.

In addition, many agents design and administer employee wellness plans for their group health clients, and they often serve as a de facto extension of their small business clients’ human resources departments, he said.