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Should Exchange Enrollers Have Producer Licenses?

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Organizers of the Nevada health insurance exchange are thinking about the approach their exchange will take to working with agents, brokers and “Navigators.”

Staff members at Nevada’s Silver State Health Insurance Exchange have covered  that topic in a new draft report on “Navigators, Producers and Outreach Specialists in the Silver State Health Insurance Exchange.”

The Nevada exchange organizers want to get any Navigator staffers who help consumers enroll in exchange plans licensed as “exchange producers,” and the organizers also want to encourage traditional health insurance agents and brokers to sell exchange plan coverage to consumers, according to a report draft posted on the Nevada exchange program website.

The Nevada exchange staff members note that, when they came up with the current draft of the report, they tried to accommodate the views of U.S. Health and Human Services Secretary Kathleen Sebelius and the views of officials at the Nevada Division of Insurance.

An exchange panel, the Consumer Assistance Advisory Committee, plans to review the report Wednesday during a public meeting.

The Exchange System

The Patient Protection and Affordable Care Act of 2010 (PPACA) calls for states to work with federal agencies to set up a system of exchanges, or Web-based health insurance supermarkets, by 2014.

PPACA opponents continue to work through the courts, Congress and the election process to repeal PPACA or block implementation of the law. If the law takes effect on schedule and works as drafters expect, consumers will be able to use new PPACA tax credit subsidies to buy coverage — and enroll in public health programs, such as Medicaid — through the exchanges.

Navigators — new consumer assistance entities to be created by PPACA — will help consumers figure out how to use the exchanges and the subsidies.

States can choose how to run the exchanges, and whether to turn part or all of the responsibility for running an exchange over to the federal government. Nevada has chosen to build its own exchange.

Insurance trade groups have argued that Navigators should be licensed as brokers; consumer groups have argued that Navigators need not be licensed as producers because the role Navigators will play will be different from the role producers typically play.

PPACA itself has limited traditional brokers’ ability to serve as Navigators by stating that Navigators cannot be affiliated with insurers and cannot get any form of compensation, such as commissions, from insurers.

The Sebelius Letter

The Nevada exchange staff members have included a copy of a letter that U.S. Health and Human Services Secretary Kathleen Sebelius sent to Rep. Adam Kinzinger, R-Ill., July 11 in a packet of consumer assistance committee meeting materials.

Kinzinger and colleagues asked Sebelius about getting Navigators licensed as producers.

Sebelius told Kinzinger that she believes that states should have the authority to develop licensing standards for Navigators, and that a U.S. Department of Health and Human Services (HHS) final rule states that an exchange must develop training standards for Navigators.

But the typical insurance producer licensing process gives producers too little information about public health programs to prepare the producers to serve as Navigators, Sebelius says.

The role of a Navigator will be much different from the role of a licensed producer, because a Navigator will simply be helping consumers understand how an exchange works, not helping a consumer choose a plan,  Sebelius adds.

HHS said in the final rule that at least two types of entities should serve as Navigators for each Exchange, and that one of the entity types must be a “community and consumer-focused nonprofit group.”

“Because the final rule defines an ‘agent or broker’ as ‘a person or entity licensed by the state as an agent, broker, or insurance producer,’ a requirement that Navigators hold a producer license would make every Navigator an agent or broker, and thus violate the standard at least two types of entities serve as Navigators,” Sebelius says.

The Nevada Division of Insurance

Although Sebelius seems to be opposed to the idea of licensing Navigators as producers, officials at the Nevada Division of Insurance told the Nevada exchange staff members that they believe Navigators must be licensed as full producers to protect the public.

Nevada division officials want all Navigators to be established entities, such as limited liability companies or sole proprietorships, the exchange staff says.

The division also wants the individuals who work for a Navigator and enroll consumers in exchange health plans to have Nevada division producer licenses.

The Navigator-enrollers would get a producer health insurance license from the division and be classified as exchange producers, the exchange staff says.

The Navigators Report Draft

The exchange staff says in the Navigators report draft that Navigators and producers will have different roles in the Nevada exchange, but that both will have roles.

When the exchange opens up and PPACA tax credits become available, “producers will increase awareness of the exchange, increase enrollment in the exchange and ultimately encourage the long-term financial sustainability of the exchange,” the staff says.

The exchange enrollment system will transmit a traditional producer’s National Producer Number to the carrier, and the carrier will use the number to make commission payments, the staff says.

Enrollers who work directly for Navigators will be licensed as exchange producers, and those enrollers will not receive compensation from carriers, the staff says.

“Any producers that are currently licensed and wish to obtain an exchange producer appointment must sever all appointments with carriers,” the staff says.


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