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Bill to Exclude Agent Compensation From MLR Gets Hearing This Week

A bill strongly supported by PIA that would remove agent and broker compensation from the calculation of medical loss ratios (MLR) will get a hearing...
September 13, 2011

A bill strongly supported by PIA that would remove agent and broker compensation from the calculation of medical loss ratios (MLR) will get a hearing this week. On September 15, the House Energy and Commerce Subcommittee will consider the Professional Health Insurance Advisors Act of 2011 (H.R. 1206).

H.R. 1206 would exclude producer compensation from medical loss ratio (MLR) calculations. Interim regulations issued by the Department of Health and Human Services (HHS) to implement the federal healthcare reform law classified producer compensation within overall administrative expenses that are limited to 15 percent or 20 percent. Under H.R. 1206, producer compensation would be calculated outside the MLR. Since HHS announced its interim regulation, many carriers have responded by slashing agent and broker compensation, some by as much as 50 percent.

Although the National Association of Insurance Commissioners' (NAIC) Professional Health Insurance Advisors Task Force recommended the NAIC back the bill, the NAIC Executive Committee did not take action after discussing it during a July 12 conference call, and the NAIC's summer meeting was canceled because of Hurricane Irene. Florida Insurance Commissioner Kevin McCarty, who chairs the task force, says the NAIC will likely take up the matter at a future meeting. The National Conference of Insurance Legislators (NCOIL) has unanimously endorsed H.R. 1206.

PIA is actively supporting passage of H.R. 1206 with an ongoing nationwide grassroots action campaign. In addition, PIA has submitted testimony urging HHS to calculate producer compensation outside of the MLR when it issues final regulations.

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