NU Online News Service, June 3, 12:05 p.m. EDT
Commissions received by property and casualty agencies from their benefits divisions could be affected by new medical loss ratio standards state regulators are required to institute, but regulators so far have not committed to a date for implementation.
While moving expeditiously to establish uniform rules and standards for MLRs by the end of the year, state insurance regulators say they can’t commit themselves to an exact timeline.
Jane Cline, president of the National Association of Insurance Commissioners and West Virginia insurance commissioner; and Therese Vaughn, NAIC chief executive officer, made the comment in a letter to officials of the U.S. Department of Health and Human Services.
The letter was written in response to an Obama administration request that the rules be in place by June 1, although the law gives them until Dec. 31.
The issue is important to property-casualty agencies with benefit practices because the MLR rules established by state regulators will directly impact commissions paid to agents.
Reacting to the NAIC comments to HHS, officials of the National Association of Health Underwriters said it supports the decision of state regulators to proceed deliberately so the medical loss ratios will be clearly defined.
Janet Trautwein, executive vice president and CEO, and Peter Stein, vice president of congressional affairs for NAHU, added that the regulator’s action would have “significant impact” “on the quality and cost of insurance in the future.
NAIC officials are responding to HHS, because under the new healthcare reform law, state regulators are required to establish uniform definitions and standardized methodologies for calculating the medical loss ratio and rebates outlined in the law.
HHS will then have to certify the rules. But Ms. Cline and Ms. Vaughn said that to ensure that all views are considered, the NAIC is “using a very transparent, but time consuming process” to craft the rules.
They noted that MLR calculations not done correctly could have a destabilizing affect on the marketplace, which they said emphasizes the need to take deliberate time on the issue.