Last week, a new bill entitled, “Access to Professional Health Insurance Advisors Act of 2011” (H.R. 1206), was introduced by Reps. Mike Rogers (R-MI) and John Barrow (D-GA). H.R. 1206 represents an important boost to insurance brokers and producers. If adopted, the bill would allow states to modify the medical loss ratio (MLR) formula that supports the continued use of brokers if there is a threat of market destabilization. The bill recognizes the “indispensable role played by licensed independent insurance producers” to ensure their functions are “recognized and protected.”
As background, one of the more controversial elements of the Patient Protection and Affordable Care Act (PPACA) is the mandating of new MLR requirements for health plans. Among other concerns, the U.S. Department of Health and Human Services (HHS) promulgated regulations that include broker/producer commissions as a “non-claims” cost, which is part of the “administrative” portion of the MLR formula.
Supporters of a fixed MLR viewed it as an attempt to keep administrative costs to a minimum so a majority of premiums can go to healthcare. Depending on the size of the insured group, health insurance plans must spend 80-85% of their premiums on the provision of healthcare and must manage their overhead out of the remaining balance.
BenefitMall and other organizations believe adding broker/producer commissions under the MLR’s administrative bucket will force health plans to reduce or eliminate commissions for licensed brokers, and ultimately hurt consumers who will no longer have access to expert advice when purchasing health insurance and/or addressing a coverage concern.
The MLR debate over the formula, policyholder rebates, and other mandated requirements has not dissipated in recent months. In a letter to HHS, the National Association of Insurance Commissioners recently went on the record supporting the modification of the MLR. In addition, a number of private sector groups also support H.R. 1206, including the National Association of Health Underwriters. While support in certain areas of the health community is growing, the removal of broker fees from the MLR still has opposition. For example, a number of consumer groups and the American Medical Association are major opponents.
H.R. 1206, which has garnered impressive bipartisan support, with over a dozen co-sponsors (11 republicans and 4 democrats), has been referred to the House Committee on Energy and Commerce. Updates will be provided as additional sponsors sign on to the Bill and it moves out of Committee. A similar bill is expected to be introduced in the U.S. Senate in April.
Stay tuned for additional details.