Regulators To Take Up Agents' MLR Concerns This Month

NU Online News Service, Sept. 3, 10:31 a.m. EDT

WASHINGTON–Health regulators will deal this month with a request by agents that their commissions not be treated as part of a company's premium revenue for purposes of establishing medical loss ratios.

The National Association of Insurance Commissioners (NAIC) and the Department of Health and Human Services (HHS) are targeting Sept. 23 as the deadline for finalizing a provision of the health care reform law that limits administrative costs to a maximum of 20 percent, and in some cases, 15 percent of premiums.

According to officials of the National Association of Insurance and Financial Advisors (NAIFA), the National Association of Health Underwriters (NAHU) and the Independent Insurance Agents and Brokers of America (IIABA), the industry is lobbying the NAIC to establish agent commissions as a pass-through expense excluded from the MLR calculation.

According to a NAIFA official, agent groups are also working to have a rebate transition adopted to allow companies the time necessary to modify their operations in a staged process in order to avoid significant consumer harm. "There are several states where there could be particular concern given current statutory MLR levels and the number of people with individual coverage," a NAIFA official explained.

The NAIC passed a resolution at its summer meeting supporting a carve-out for agents on the commission issue. The resolution was sponsored by Florida Insurance Commissioner Kevin McCarty, co-sponsored by 24 other commissioners and passed unanimously by the NAIC at a plenary session.

In seeking approval, Commissioner McCarty expressed "serious concerns" that an immediate adoption of the MLR ratios without accommodating the needs of health insurance agents "will negatively impact the selection process for health insurance in the small group and individual market."