Both the National Association of Insurance Commissioners (NAIC) and the federal government have initiated reviews of the practice of small group employers self-funding their employees’ health insurance benefits. The catalyst for much of this activity is fueled by concerns that some employers will prefer to self-fund rather than participate in the new insurance reforms being implemented through the Patient Protection and Affordable Care Act (PPACA). Simply put, it may be more economical for some employers to self-fund and avoid some of new regulatory requirements that are being implemented. This legislative al
Love it or hate it, the Affordable Care Act has sparked a great deal of debate within the health care industry. One section of the Patient Protection and Affordable Care Act (PPACA) that has proven to be particularly problematic is a provision establishing Medical Loss Ratio (MLR) benchmarks for health insurance carriers. Several congressional bills have been filed in an attempt to remedy the situation.
U.S. Congressional House Subcommittee Holds Hearing on Medical Loss Ratios – Concerns Expressed about Broker Role
Last Thursday, the U.S. House of Representatives Small Business Subcommittee on Investigations, Oversight and Regulations held a hearing on the issue of the Medical Loss Ratio (MLR) in Washington, D.C. Titled “New Medical Loss Ratios: Increasing Health Care Value or Just Eliminating Jobs?,” the hearing was a forum for views on how the MLRs mandated by the Patient Protection and Affordable Care Act (PPACA) could impact the health care insurance industry. Most individuals testifying expressed concerns about how the MLR formula as currently structured could greatly hinder the ability of brokers and agents to support consumers and business owners when purchasing health insurance.
The Department of Health and Human Services (HHS) just released its final Medical Loss Ratio rule, and the outcome does not bode well for the broker/agent community. In the ruling HHS has rejected the NAIC recommendation to exclude broker/agent fees from insurance companies’ allowed administrative costs.
Under the rule beginning this year, individual and small group market insurance plans will be required to spend 80% of the premiums on medical care and health care improvement. Only the remaining 20% will be allowed towards administrative costs. Much the same, large group plans will have an 85% of premium requirement.
Last week, BenefitMall reported on a hotly debated resolution adopted by the National Association of Insurance Commissioners (NAIC) to adjust the Medical Loss Ratio (MLR) formula to recognize the role of professional health agents and brokers. (To read the blog, click here).
The National Association of Insurance Commissioners (NAIC) has passed a resolution (26-20-5) to change health care reform laws related to Medical Loss Ratio. They are recommending that the Department of Human Health and Services (HHS) and Congress work to ensure that the role of professional health insurance agents remains a strong part of the healthcare process. The NAIC resolution strongly supports the need of agents to serve as consumer advocates in the process of securing health care coverage.
Insurance Regulators Tout Strength of State-Based Insurance and Financial Regulation on Capitol Hill
With all the focus at the federal level on health care reform and budget spending shortfalls, a recent congressional hearing reminds us of the importance of state-based insurance regulation. The hearing focused on several financial technical provisions that don’t always impact brokers directly. However, an indirect relationship exists between the stability of health insurance offerings and the financial systems used to support and underwrite those offerings.
Last month, the NAIC published a brief video to help answer questions posed by consumers regarding the Patient Protection and Affordable Care Act (PPACA). Brokers and agents may want to use this video as a reference tool for their clients. Subjects covered by the video include:
- Individual and employer mandates
- Pre-existing conditions
- Healthcare exchanges
- Preventive care measures
- Medicare. 
to view the video.
The issue of how to treat broker commissions in the Medical Loss Ratio (MLR) is heating up. On June 7, a key health committee of the National Association of Insurance Commissioners (NAIC) adopted the findings of a report carried out by the NAIC Health Care Reform Actuarial Working Group (Actuarial Working Group). 
Conflict is heating up relating to the Medical Loss Ratio (MLR) regulations and the impact on broker commissions. A growing faction of advocates is encouraging key policymakers to remove the broker commission from the MLR formula altogether. This blog offers a snapshot of likely events over the next several weeks.
As of January 1, 2011, the interim final MLR regulations now require health insurance issuers to spend at least 80% of the funds they receive in health plan premiums from the individual and small group markets -- and 85% from the large group market -- on a combination of medical care claims and activities to improve healthcare quality.