UPDATE: The bill number is S.650.Adds coments by Sens. Landrieu, Isakson.
The Medical Loss Ratio (MLR) bill is back in the Senate after a long hiatus, or death, as some might say, in committee last year.
Sens. Mary Landrieu, D-La., Johnny Isakson, R-Ga., Mark Begich, D-Alaska, and Lisa Murkowski, R-Alaska, reintroduced late Thursday a bipartisan proposal written to preserve the role of health insurance agents and brokers. The senators are expected to have a statement later today.
The bill is called the Access to Independent Health Insurance Advisors Act of 2013. It is awaiting a number assignment. Last year, current NAIC CEO and past senator, Ben Nelson, D-Neb., was a co-sponsor.
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Sen. Landrieu chairs the Committee on Small Business and Entrepreneurship, which studies the issues relating to American small business enterprises.
The Senate version of the MLR bill would change the provision in the Patient Protection and Affordable Care Act (PPACA) to specifically exclude agent compensation from the MLR formula, but chiefly in the individual and small group markets.
The MLR rule, which went into effect on Jan. 1, 2011, mandates that at least 80 percent (individual and small group) or 85 percent (large group) of premiums collected by the carrier must be spent on “health care quality improvement.”
The law, as written by Congress, did not statutorily address how to classify independent agent compensation under the MLR formula. However, through the regulatory process, the Department of Health and Human Services (HHS) ruled that not only was agent compensation included in the MLR formula but it was included as a part of the “non-claims costs” category, the agent community pointed out. Although much of the the NAIC leadershio bucked at the interpretation through 2011 and tried to get it changed, it is the law by regulatory decree.
The Senate bill is not up on government tracking of bills, yet, but last session’s is http://www.govtrack.us/congress/bills/112/s2288 .
The MLR provision limits administrative costs in health insurance premiums to 15 percent for large groups and 20 percent for small groups. As a result, agents say their commissions have been cut by up to 50 percent on health insurance products.
“The (MLR) requirements contained in the Patient Protection and Affordable Care Act continue to have a devastating financial impact on the country’s approximately half-million licensed professional health insurance agents and brokers, as well as on all of their employees and their millions of employer and individual clients,” stated Janet Trautwein, CEO of The National Association of Health Underwriters (NAHU).