Disheartening some brokers, the National Association of Insurance Commissioners has backed away from supporting a congressional bill that could exclude insurance agent compensation from medical loss ratio calculations. After an assembly of all voting members of the NAIC on July 12, the group decided against endorsing the bill, H.R. 1206.
“The committee considered the realistic probability of H.R. 1206 passing Congress and providing a workable solution to the challenges raised by the NAIC,” says Erin Johnson, an association spokeswoman “Upon further review, the executive committee chose not to take further action on the task force's recommendation.” The Professional Health Insurance Advisors Task Force had voted to recommend endorsement of the bill June 30, but the task force vote does not represent NAIC policy, the organization responded.
After the task force endorsed the bill, the National Association of Health Underwriters praised the NAIC for their dedication to the bill. “H.R. 1206 is the best way to ensure consumers continue to have access to licensed health insurance professionals who dedicate themselves to helping people find quality, affordable health care coverage,” Janet Trautwein, NAHU CEO, had said.
The legislation would exclude producer compensation from the MLR calculations. U.S. Rep. Mike Rogers, R-Mich., the lead sponsor, has said health insurance producers will continue to be in a desperate situation unless Congress acts to change the MLR formula in the federal regulations. The NAIC say they will continue to work with the U.S. Department of Health and Human Services on “other possible alternatives.”
Producers have turned to members of Congress and state insurance regulators for help because of concerns about the MLR provisions in the Patient Protection and Affordable Care Act, which require insurers to spend 85 percent of large group revenue and 80 percent of individual and small group revenue on health care and quality improvement efforts.
HHS has issued interim regulations that classify producer compensation as an administrative expense for purposes of MLR calculations. Agents and brokers say insurers are using the federal MLR provision to justify cutting individual and small group producer commission rates as much as 50 percent.
In a statement released by the Florida NAIC office, Florida Commissioner Kevin McCarty, who leads the Professional Health Insurance Advisors Task Force, said despite the consensus to not take further action on the recommendation at this time, he still has not changed his mind on the bill.
“[McCarty] offered his report on the task force's support for the Rogers' bill, and also reported that the task force is continuing to work with all interested parties and HHS to evaluate the possibility of a compromise that would result in a more timely result than pursuing a change in the MLR. Commissioner McCarty continues to support the underlying purpose of the Rogers' bill, which is to maintain the role of agents, and fair compensation for health insurance agents.”
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