NAIC Working With HHS on Alternatives to MLR Change

NU Online News Service, July 13, 2:51 p.m. EST

WASHINGTON—The National Association of Insurance Commissioners has decided an indirect, behind-the-scenes approach to reducing the strain on health insurance agents through the medical loss ratio provision will be most effective.

In a surprise announcement, the NAIC exeutive committee says "it chose not to take further action on the Task Force's recommendation, but to continue to work with [the U.S. Department of Health and Human Services] on other possible alternatives."

Kevin McCarty, Florida insurance commissioner and incoming NAIC president, says he is not dropping his support for an exemption, but changing his approach.

"Commissioner McCarty has not changed his position, and continues to support the bill sponsored by Mike Rogers, R-Mich., which would remove sales agents' fees from the administrative costs of insurers for calculation of the medical loss ratio," a statement from his office says.

The statement adds that the NAIC task force McCarty heads is continuing to work with all interested parties and the Department of Health and Human Services to "evaluate the possibility of a compromise that would result in a more timely result than pursuing a change in the MLR."

McCarty supports the "underlying purpose of the Rogers' bill, which is to maintain the role of agents, and fair compensation for health insurance agents." 

Janet Trautwein, chief executive of the National Association of Health Underwriters, says NAHU never expected the NAIC committee to vote on the issue this week.

But, NAHU has provided the NAIC and HHS with a 120-page report showing the "devastating impact" the provision is having on health agents, especially those serving the individual and very-small group market, she adds.

The companies serving these markets have been cutting services, closing up, or laying off employees as a result of the federal MLR, which is much more restrictive than those imposed by states in the past.

Ethan Rome, executive director of Health Care for America Now!, a consumer-oriented group, calls the decision a "victory for consumers and businesses."

He says, "I think it does send a clear message to Congress that this is not an issue that should be taken up because it is simply too divisive."

The Rogers-sponsored legislation asks members of Congress to pick winners and losers and pits brokers against consumers and all small businesses, and the bill will take $1.3 billion in rebates from consumers and give it to the insurance companies without any guarantees that it will solve any of the problems that brokers have raised, Rome says.

At the same time, Trautwein cautions that consumer groups are overplaying the rebate issue, saying the likely rebates to consumers if the MLR is not attained by an insurance company will likely be "quite modest," if anything.

Trautwein says negotiations with HHS over the issue are ongoing. She notes, "HHS has modified or delayed many other provisions of the healthcare law that have been criticized by interested parties." She would not comment further on the talks.