NAIC Adopts MLR Rules; Agent Commissions Still In Question

The commissioners cited questions concerning the legality of exempting health care agents' commissions from the MLR before tabling a resolution that would have encouraged the HHS to allow special considerations for agents in any MLR.

The MLR rules, under the Patient Protection and Affordable Care Act, requires individual and small market group health insurers to spend 80 percent of their premiums on patient care, and large group insurers to spend 85 percent.

On the creation of a carve out for agent commission affecting the MLR, Commissioner Cline said an amendment on that would conflict with proposals already submitted to Health and Human Services and there is uncertainty whether the body has the authority to do that.

She said the NAIC has sent a letter of support to HHS underscoring the important role agents and brokers play in the sale of health insurance and educating policyholders.

"We are extremely committed to working with the agent community as we work to find a resolution; and we all recognize the importance of the agent community to advise consumers and help them make informed decisions," Commissioner Cline said.

During a press conference held after the vote, Commissioner Cline said the MLR rules will now go to HHS for certification, which is expected to happen next week.

There has been no indication that HHS has raised any objection to the rules the NAIC passed, regulators attending the news conference said. Commissioner Cline noted that they have listened to all the debates and discussions and have been in constant dialogue with the members.

Kansas Insurance Commissioner Sandy Praeger, who headed the health insurance committee, said the NAIC has been responsive to producer's concerns, establishing a working group with HHS to work on their concerns.

When asked what impact the MLR will have on agent commissions, Commissioner Praeger said it is not certain what, if any impact there may be, and that like aspects of the health reform initiative, it is a work in progress. But it is an issue of concern to agents and needs to be addressed.

The NAIC did move to create a subgroup of its executive committee to work with HHS to accommodate producer compensation in the MLR. It acted at the request of Ohio Commissioner Mary Jo Hudson and Florida Commissioner Kevin McCarty.

Nicole Allen, senior vice president, strategic resources, for the Council of Insurance Agents & Brokers, said, "While we are disappointed that the amendment to exclude producer commissions from the MLR was not offered, we very much appreciate the NAIC's continued support of the producer's role in the health insurance marketplace."

The Independent Insurance Agents and Brokers of America (IIABA) voiced "strong disappointment" over the NAIC's decision not to exempt agents' commissions from the medical loss formula.

"The Big 'I' is very concerned that the MLR provision of the new health care reform law will have a devastating effect on the private marketplace and that consumers will be negatively impacted," said Charles Symington, IIABA senior vice president for government affairs.

"If the NAIC and HHS do not fix this language, the role of the agent in the health care delivery process could be diminished, which would lead to market disruption and considerable consumer confusion."