The leading industry trade organizations expressed disappointment after the December 2 Department of Health and Human Services release of the final medical loss ratio rule failed to remove broker commissions from the administrative side of health reform’s MLR calculation.

In a statement, the National Association of Health Underwriters says, “HHS did nothing to mitigate the adverse effects the MLR rule is currently having on the ability of insurance producers to serve the demands and needs of health care consumers.”

The Patient Protection and Affordable Care Act requires 80%-85% of health insurance premiums be spent on medical expenses, leaving broker commissions as an administrative expense. Since the MLR changes took effect in January, “we’re seeing that commissions are being reduced,” says Diane Boyle of the National Association of Insurance and Financial Advisors in a podcast.

The HHS rules come after the National Association of Insurance Commissioners’ November 22 decision to endorse the role of the insurance broker by urging congressional action. “We are … hopeful that Congress will join the NAIC in recognizing the harm that’s being caused to consumers and make the necessary change,” says Boyle. “The health care arena is becoming more and more complicated. Consumers are going to want to have access to professional licensed insurance agents.”

“For this final regulation to have been issued with no changes to the treatment of agent compensation so quickly on the heels of the NAIC’s resolution will not only harm our thousands of small business owners but most importantly the consumers they serve,” adds Charles Symington, vice president of government relations at The Independent Insurance Agents and Brokers of America. “This relief is essential in order for consumers to have continued access to the professional services of agents and brokers.”

Janet Trautwein, NAHU CEO, points out that the NAIC “was specifically charged by Congress” to form PPACA’s MLR guidelines and adds, “this unprecedented action by the NAIC shows the commitment of our nation’s state insurance commissioners to protecting consumer and employer access to professional health insurance agents and brokers, and we will continue to work with HHS to find an acceptable solution to this ongoing problem.”

The Council of Insurance Agents & Brokers Director of Government Relations Joel Kopperud suggests that the target of the original MLR regulation was carrier business models, not broker business models, and feels HHS is not quite getting that. “HHS I think needs to review more deliberately the congressional intent of the MLR and I think that’s what we’re all frustrated with,” says Kopperud. “Nobody was looking at lopsidedly impacting broker services, which is what’s happening.” 

Now, CIAB, NAHU, The Big ‘I’ and NAIFA look to Congress to pass H.R. 1206, legislation introduced by Reps. Mike Rogers (R-MI) and John Barrow (D-GA) that would exclude agent and broker compensation from the MLR calculation. “We look forward to working with members of Congress on this critical issue,” says NAHU’s Trautwein.

“The next step for us is to continue what we’ve been doing and that is working with members of Congress to make sure they understand the adverse affects that the medical loss ratio is actually having in the marketplace,” adds Boyle.

She believes the NAIC resolution still provides an opportunity to work with senators “who have been somewhat resistant to the efforts that have been going on on the House side,” adding that H.R. 1206 now has more than 140 cosponsors.

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