State regulators call for 'immediate actions' to fix MLR

The Department of Health & Human Services (HHS) should take "whatever immediate actions are available" to exempt agents and brokers from the medical-loss ratio (MLR) requirement, says the National Association of Insurance Commissioners (NAIC).

The NAIC passed a hotly-contested resolution, in which the group of state insurance regulators urged HHS to take one of three actions--stop enforcing the MLR requirement, allow state adjustment requests, or reclassify compensation to agents. The resolution, which passed with a 26-20 vote, also says Congress should "expeditiously consider legislation amending the MLR provisions."

Some of the commissioners are concerned that brokers and agents will see severe cuts in their commissions as insurers minimize their administrative expenses to meet the MLR requirement, the Wall Street Journal reports. The resolution reflects "the critical role that agents play, not only at the point of sale, but in following up afterward," because they help clients understand their benefits and access care after they buy plans, Florida Insurance Commissioner Kevin McCarty, one of the resolution's drafters and NAIC president-elect, told the WSJ.

Despite the NAIC's drastic recommendation, it may have no concrete impact since HHS has no legal authority to exempt agent commissions from the MLR. The change, therefore, would require Congressional action because the statutory definition of MLR does not allow those commissions to be exempt, notes LifeHealthPro.

The key impact would be on legislation under consideration in the House. H.R. 1206 would exclude producer compensation from MLR calculations while H.R. 2077 would repeal the MLR entirely. Even if the bills pass the House, experts say passing the Senate is unlikely, particularly after Senate Commerce Committee Chairman Jay Rockefeller blasted NAIC's resolution. "This decision puts corporations ahead of consumers--taking money out of the pockets of consumers and putting it in the hands of greedy insurers," he said.

To learn more:
- read the NAIC MLR resolution (.pdf)
- see the Wall Street Journal article
- check out the LifeHealthPro article on the NAIC resolution and its implications