The National Association of Insurance Commissioners, Washington, D.C., recently approved a medical loss ratio reporting blank that contains broker commission costs into the administrative expense total – and brokers are reacting.
Based on the new requirements, administrative costs are limited to 15 percent for large plans and 20 percent for individuals and small groups. Starting in 2011, insurers that do not follow these provisions must issue refunds to those covered in their plans.
Though Alan Katz, principal of the Alan Katz Group, Los Angeles, isn't pleased with the NAIC's recent move – and never believed exempting commissions from the MLR would get far – he does not expect a complete solution anytime soon. Like many provisions of the Affordable Care Act, the new commission requirement is under examination.
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"The NAIC's failure to remove broker commissions from the medical loss ratio calculations is disappointing but is far from the end of the matter," Katz says. "It appears a majority of the commissioners were willing to support this approach but were told by NAIC attorneys that it exceeded their authority and consequently could require HHS to reject all of their recommendations concerning the MLR rules."
Still, Katz does find there are encouraging indications regarding future provisions, as the Department of Human and Health Services proved it was willing to work with commissioners. The NAIC has created an Executive Committee subgroup to work with HHS on producer compensation in MLR calculation.
"That supportive commissioners were able to negotiate with Health and Human Services to create a working group to address the issue, using the commission exemption as a starting point, is a very positive outcome," Katz says. "This approach keeps the idea alive and makes possible a long-term solution that is acceptable to both the administration, the commissioners and brokers."
The National Association of Health Underwriters – a prominent advocate that has been lobbying for months for fair agent compensation under health reform – had this to say following the NAIC's final rulings:
"We are pleased that the NAIC continues to recognize and underscore the essential role that health insurance agents and brokers serve in our health system," stated NAHU CEO Janet Trautwein. "To further their commitment to agents and brokers, the NAIC's Executive Committee unanimously agreed to establish a joint taskforce with HHS to further examine the critical role that health insurance agents and brokers play, and determine how that role can be preserved in our newly reformed health care system.
"NAHU believes that broad representation is vital to the success of the newly created taskforce. Health insurance rates for 2011 are already being established so the NAIC and HHS need to work quickly and effectively to ensure that health care consumers receive the best possible advice and service from health insurance agents and brokers in the midst of this massive health care overhaul.
"NAHU will continue our efforts to ensure that consumers have access to professional and fairly compensated agents and brokers from the point-of-sale through the life of their policy. We look forward to continuing our work with the NAIC, HHS and other regulatory bodies to put in place workable and sustainable policies to preserve access to affordable health insurance coverage."
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