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NAIC Executive Committee Holds Off Endorsing Bill Removing Agents From MLR

It was a win then a setback for agents and brokers, as a health task force of the National Association of Insurance Commissioners (NAIC) voted...
July 19, 2011

It was a win then a setback for agents and brokers, as a health task force of the National Association of Insurance Commissioners (NAIC) voted to endorse legislation that would exempt producer compensation from medical loss ratio (MLR) calculations - but then the NAIC Executive Committee declined to follow suit.

After months of study, the NAIC's Professional Health Insurance Advisors Task Force had voted overwhelmingly to endorse H.R. 1206, the Access to Professional Health Insurance Advisors Act of 2011 by Rep. Mike Rogers (R-Mich.) that would exclude agent and broker commissions from medical loss ratio (MLR) calculations under the new healthcare law.


But the good news for health insurance agents and brokers was short-lived, as the NAIC's Executive Committee last week declined to follow suit, saying "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." NAIC officials say they instead will take an indirect, behind-the-scenes approach in exploring possible solutions with the department of Health and Human Services (HHS).

"The NAIC is already on record with a resolution stating that agents and brokers are 'indispensible' in helping consumers purchase health insurance through the new insurance exchanges being formed under the Patient Protection and Affordable Care Act (PPACA)," said PIA National Assistant Vice President of Industry Affairs David Eppstein, who represents PIA at the NAIC. "The endorsement of H.R. 1206 by the NAIC's task force was a strong affirmation of the NAIC's position. But then, the failure of the NAIC's Executive Committee to follow suit seems to undercut its own position."

"We believe the NAIC leadership is committed to fair treatment for the producers it calls 'indispensible,'" Eppstein said. "And we expect NAIC leadership to make their position clear to HHS that agents are indeed indispensible and deserve to be adequately compensated for their services."

What It Means to Agents: By not immediately following the recommendation of the task force it appointed to deal with this matter, the NAIC's Executive Committee seems to have undercut its own position. Instead of endorsing Rep. Rogers' bill mandating that producer compensation be removed from the MLR, the NAIC Executive Committee declined to do so, to pursue a compromise with HHS. We hope the NAIC's strategy of focusing on HHS is successful.

Endorsing H.R. 1206 would only strengthen the NAIC's position on this issue with HHS. And passing H.R. 1206 would settle this issue by taking it out of the hands of HHS.

PIA believes there is significant support for H.R. 1206 among the rank-and-file state insurance commissioners who make up the NAIC Plenary.  Last year, when it appeared that the entire NAIC membership was poised to pass a resolution supporting removing agents from the MLR, that resolution was abruptly pulled from the floor and a vote was not allowed. PIA believes that an up-or-down vote by the entire NAIC Plenary on endorsing H.R. 1206 should be held.

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