The NAIC is expected to tell the House Energy & Commerce Committee “No” on all questions asked with respect to NAIC leadership interactions with the Department of Health and Human Services on developing the NAIC’s model law on medical loss ratios (MLR).
The Patient Protection and Affordable Care Act (PPACA) requires the NAIC to establish uniform definitions of activities which improve health care quality. These definitions were to serve as the basis for the Act’s MLR requirements. Beginning in 2011, insurance companies have been required to comply with new MLR requirements that mandate at least $0.80 of every health insurance premium dollar to go toward the cost of actual medical care, leaving only the remaining $0.20 to cover administrative costs–where insurers derive any profit.
The MLR has been a deeply contentious issue, with insurance industry advocates noting that it could lead to carriers cutting commissions paid to agents in order to make up the difference for constrained profit margins. National Underwriter has received numerous letters and comments from health agents themselves stating that the MLR alone could force many of their practices to close.
The House Energy and Commerce Committee sent a letter on Dec. 7 to Iowa Insurance Commissioner and NAIC President Susan Voss, former NAIC president Jane Cline (now in private practice as a lawyer in West Virginia), and Kansas Insurance Commissioner Sandy Praeger (who works extensively on NAIC health insurance committee work), asking four questions.
The questions asked Voss, Cline and Praeger if HHS officials interacted with the NAIC staff or influenced the NAIC on its MLR model regulations with requests, provisions or pressure. A letter is due to Congress Dec. 19th.
“The bottom letter on this letter from Energy & Commerce is … basically on all these questions, no, no, no, no, no,” Voss said to National Underwriter recently. “We had no communications (with regard to the specific questions). Did they provide us interpretations? No. Did they offer legal interpretations? No. Basically, we were left alone to do the MLR.”
“The bottom line is, we had no real interaction with HHS on these issues and we will be issuing a letter (to that effect,)” Voss stated.
It follows the decision by HHS on Dec. 2 to include agents in the MLR calculations in a final regulation despite a resolution adopted by the NAIC the prior week asking that agents be removed from the calculation.
The letter was signed by Rep. Fred Upton (R-Mich), chairman of the Energy and Commerce Committee; Joseph Pitts (R-Pa.) and Michael Burgess (R-Texas), chairman and vice chairman of E&C’s Health Subcommittee; and Cliff Stearns (R-Fla.), chairman of the committee’s Subcommittee on Oversight and Investigations.
Specifically, the letter asked if HHS officials had discussed the MLR regulation with commissioners or staff, and wanted to know which staffers and commissioners participated in such discussions.
The letter also asks whether HHS officials engaged in any communications “with you or any NAIC staff, whether oral or written, which indicated that HHS would refuse to certify in whole or in part the model regulations being considered by the NAIC?”
The letter also asks whether HHS officials provided NAIC commissioners or staff with legal interpretations of activities that may or may not be included within the definition of “activities that improve health care quality,” and “non-claim costs” under provisions of the regulations under attack by the committee.
The NAIC did tell HHS when it was done and what it had done and what was outside its purview. In Oct. 21 2010, the NAIC stated that “in coordination with the anticipated completion of the model regulation, last week the NAIC sent a letter to HHS Secretary Sebelius addressing related issues raised during this summer’s deliberations that were outside the purview of the NAIC’s responsibilities. Issues raised in the letter included: insurer solvency; the flexibility for states to phase in recommendations to reduce market disruptions; the application on expatriate policies; and the methods of paying related rebates to consumers.”
On Nov. 22, the NAIC adopted a resolution urging Congress and HHS to use their respective authorities to preserve consumer access to insurance agents and brokers by adjusting the MLR component of PPACA to accommodate the essential service provided by producers in the health insurance market.
The HHS declined to do so, upsetting many states who say the rule is undermining the individual health insurance market in their states by clobbering agent commissions.
An Energy & Commerce spokeswoman pointed to the remarks in the letter that prompted its inquiry to the NAIC:
“The Energy and Commerce Committee has held multiple hearings at which Administration officials and stakeholders testified regarding the MLR. Several witnesses have given testimony regarding the law’s harmful impacts on jobs in the agent and broker community. We have also heard testimony regarding the negative impacts of the MLR provision on patient choice in health coverage, as well as its deleterious effects on health care quality and the prevention of fraud. With this in mind, we would like to understand the processes behind NAIC’s deliberations on the MLR rule and its decision to recommend the model regulation as drafted.”
The committee has introduced two measures supported by the insurance agents. But the panel appears to be unable to win full committee and full House support for the measures. And, Democrats in the Senate are opposed, according to industry officials, as are insurance commissioners in large states, such as California, Washington and New York.
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.
The HHS did not return an email query.