Senate Introduces MLR Bill Excluding Agent Compensation from Formula

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.

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.

The Senate bill is not up on government tracking of bills, yet, but last session’s is http://www.govtrack.us/congress/bills/112/s2068 

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).

Trautwein explained that the MLR requirements significantly and negatively impact access to health insurance agents and brokers at the very time our economy is the weakest and health care consumers need the most help.

She noted that the Congressional Budget Office (CBO) reported that agents and brokers often serve as de facto human resources departments for many small firms — negotiating premiums, processing claims and enrolling employees. 

“Without agents' expert advice, many individuals and businesses will end up spending more for health insurance and receive less care,” Trautwein warned.

"We support the bill and hope that it sees its way to the finish line, said Joel Kopperud, a key lobbyist for the Council of Insurance Agents & Brokers (CIAB). He added that CIAB is very concerned about the premium increases that are around the corner in 2014 and the impact they’ll have on the small group market and called on Congress to do even more. 

"The carriers are pointing to the new 3:1 age bands and the disproportionate health insurance tax, and there are reports that hospitals and provider fees are on the upward trajectory, and we’re concerned about the impact these factors will have on consumers and employers that are looking to do right by their employees. Members of Congress need to quickly focus their attention on skyrocketing costs and encourage employer-based solutions that have a positive impact on human behavior and keep costs down," Kopperud said. 

“We greatly appreciate Senators Landrieu and Isakson once again introducing legislation to shelter agent commissions from the detrimental Medical Loss Ratio regulations as part of the Affordable Care Act.  The MLR regulation has done great damage to our small business members and the customers they serve; and immediate relief from the regulation is necessary and is sound policy,” stated Charles Symington, senior vice president, government affairs, for the Big I, the Independent Insurance Agents & Brokers of America Inc.

Mike Becker, vice president, federal affairs of the National Association of Professional Insurance Agents (PIA) stated that this bill "removes artificial disincentives which could prevent licensed independent insurance producers from continuing to provide a wide range of services for both individual consumers and the business community in dealing with the Affordable Care Act."

Becker also noted that PIA is optimistic for passage of Sen. Landrieu’s bill, "as it is crafted in a way to avoid negative impact on the federal deficit." 

In the House, last session’s bill became dormant and agents and brokers are hoping it will be reintroduced. 

The old H.R. 1206 was sponsored by Rep. Mike Rogers, R-Mich., and Rep. John Barrow, D-Ga., and had scores of co-sponsors. Rogers' office did not return a query by presstime on efforts planned this year in the House.

Rep. Marsha Blackburn, R-Tenn., vice chair of the House Energy and Commerce Committee told NAHU at its legislative conference on Feb. 27 to keep its eye on Energy & Commerce as well as on Ways and Means for action this year on health reform policy change initiatives and other work on Republican priorities, including the possible reinvigoration of some old business with agent-promoted legislation. 

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