The Obama administration did so today through a final rule and interim final rule adopted by the Department of Health and Human Services implementing the MLR provision of the Patient Protection and Affordable Care Act.
It acted even though the NAIC narrowly adopted a resolution via conference call Nov. 22 asking HHS to take “whatever immediate actions are available” to release agents and brokers from medical MLR strictures enacted under the 2010 health care reform act.
See the NAIC’s resolution here.
The MLR limits administrative costs as a percentage of healthcare premiums to 15% for large groups and 20% for small group and individual policies.
The MLR rules took effect Jan. 1, but today’s final rule makes modifications and provides certainty to how the MLR is calculated, HHS said.
The modifications are based on public comments solicited in an earlier version of the rule published by Centers for Medicare and Medicaid Services in the spring, HHS said in the final rule.
Robert Miller, president of the National Association of Insurance and Financial Advisors, confirmed the implications of the HHS action in a statement.
“NAIFA is disappointed that the administration rejected the NAIC recommendation to take action that would ensure continued consumer access to professional health insurance agents in its final MLR rule,” Miller said.
He said, however, that NAIFA remains hopeful that Congress will join the NAIC in recognizing the harm caused to consumers and make the necessary changes to the law.”
Miller’s comment referred to two pieces of legislation being considered by the House Energy and Commerce Committee. One is H.R. 1206, which would exclude producer compensation from medical loss ratio calculations. Another is H.R. 2077, which would repeal the MLR entirely.
H.R. 1206, sponsored by Rep. Mike Rogers, R-Mich., and John Barrow, D-Ga., has strong support. The bill has 139 co-sponsors. But it has been mired for months in the House.
“We now call on Congress to heed NAIC’s recommendations and pass H.R. 1206, the bipartisan legislation introduced by Representatives Mike Rogers (R-MI) and John Barrow (D-GA) that would exclude agent and broker compensation from the MLR calculation and provide state insurance regulators with greater flexibility with medical loss ratio (MLR) implementation,” said Janet Trautwein, CEo of the National Association of Health Underwriters (NAHU). “We look forward to working with members of Congress on this critical issue.”
Tim Dodge, director of research and media relations for the Independent Insurance Agents & Brokers of New York, Inc., said that the trade group was “disappointed that the final MLR rules do not include an exemption for agents’ and brokers’ commissions.”
Dodge said the lack of an exemption has caused insurance companies to reduce the compensation they pay to their agents and brokers. Consequently, Dodge said, insurance producers are finding that it might not make business sense for them to participate in the health insurance market.
He said this ”deprives consumers and businesses of the expert advice they need to make informed decisions.” He noted the NAIC resolution, adding “We continue to urge Congress and HHS to do just that.”