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Life Health > Health Insurance > Your Practice

MLR: Agent Allies May Take Indirect Approach

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WASHINGTON BUREAU — State insurance commissioners who want to help health insurance agents and brokers cope with the new medical loss ratio (MLR) rules apparently have decided that a behind-the-scenes strategy has the best change of succeeding.

A week ago, the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., looked as if it were about to support H.R. 1206, a bill introduced by Rep. Mike Rogers, R-Mich., that would exclude producer compensation from MLR calculations.

The NAIC’s Professional Health Insurance Advisors Task Force endorsed the bill StatesJune 30.

Yesterday, the effort to get the NAIC as a whole to back to the bill died during a conference call meeting that included the NAIC’s executive committee and the NAIC’s plenary — the assembly that includes all voting NAIC members.

The NAIC “chose not to take further action on the task force’s recommendation, but to continue to work with [the U.S. Department of Health and Human Services (HHS)] on other possible alternatives,” the NAIC executive committee said in a statement.

Kevin McCarty, the Florida insurance commissioner and incoming NAIC president, issued a statement after the call indicating that he is not dropping his support for an exemption but is changing his approach.

“Commissioner McCarty has not changed his position, and continues to support the bill sponsored by Mike Rogers, R-Mich., which would remove sales agents’ fees from the administrative costs of insurers for calculation of the medical loss ratio,” officials representing McCarty said in the statement.

The Professional Health Insurance Advisors Task Force is continuing to work with all interested parties and HHS to “evaluate the possibility of a compromise that would result in a more timely result than pursuing a change in the MLR,” officials said.

McCarty “continues to support the underlying purpose of the Rogers bill, which is to maintain the role of agents, and fair compensation for health insurance agents,” officials said.

Producers have turned to members of Congress and state insurance regulators for help because of concerns about the MLR provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA), which require insurers to spend 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts.

HHS has issued interim regulations that classify producer compensation as an administrative expense for purposes of MLR calculations.

Agents and brokers say insurers are using the PPACA MLR provision to justify cutting individual and small group producer commission rates as much as 50%.

Producers have argued that the customers are the ones who really pay the commissions, and that the insurers simply collect the commissions as a courtesy to the customers. The producers have asked regulators to reflect that view by keep producer commission payments out of the MLR formula.

Some consumer representatives — individuals that the NAIC has picked to represent consumers in NAIC proceedings — say there is evidence that health insurance commission levels and consumer access to health insurance agents and brokers may be more stable than producers have suggested.

Janet Trautwein, chief executive officer of the National Association of Health Underwriters (NAHU), Arlington, Va., said NAHU never expected the committee to vote on the issue so soon.

NAHU has provided the NAIC and HHS with a 120-page report showing the devastating impact the MLR provision is having on health insurance producers, especially those serving the individual and very-small group market, Trautwein said.

The companies serving these markets have been cutting services, closing up, or laying off employees as a result of the federal MLR provision, Trautwein said.

Negotiations with HHS are ongoing, and “HHS has modified or delayed many other provisions of the health care law that have been criticized by interested parties,” Trautwein said.

Ethan Rome, executive director of Health Care for America Now, Washington, a group that supports PPACA, said the NAIC executive committee decision not to back H.R. 1206 is a “victory for consumers and businesses.”

“I think it does send a clear message to Congress that this is not an issue that should be taken up, because it is simply too divisive,” Rome said.

H.R. 1206 asks members of Congress to pick winners and losers, and it pits brokers against consumers and all small businesses, Rome said.

Implementing the bill as law would “take $1.3 billion in rebates from consumers and give it to the insurance companies without any guarantees that it will solve any of the problems that brokers have raised,” Rome said.

Trautwein said any rebates consumers get as a result of the MLR provision “will likely be quite modest.”

Other MLR coverage from National Underwriter Life & Health:


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