The National Association of Insurance Commissioners, Washington, D.C., recently approved medical loss ratio (MLR) reporting rules that include broker commission costs into the administrative expense total – and brokers are not happy.

Based on the Patient Protection and Affordable Care Act (PPACA), administrative costs are limited to 15 percent for large plans and 20 percent for individuals and small groups.

Starting in 2011, insurers that do not adhere to the MLR rules must issue refunds to those covered in their plans.

Agents and insurers were hopeful that the rules would more closely pertain to claim processing, underwriting, and administration of health insurance plans such as enrollment, eligibility verification and other similar processes.
Agent/ Broker Reaction
According to a statement on the National Association of Health Undewrwriters website "the association is hopeful that agent concerns will be addressed in the new rules." Specifically NAHU CEO Janet Trautwein stated, “We are pleased that the NAIC continues to recognize and underscore the essential role that health insurance agents and brokers serve in our health system.”

Trautwein continued, “NAHU believes that broad representation is vital to the success of the newly created taskforce. Health insurance rates for 2011 are already being established so the NAIC and HHS need to work quickly and effectively to ensure that health care consumers receive the best possible advice and service from health insurance agents and brokers in the midst of this massive health care overhaul."

Insurance Industry Reaction
America’s Health Insurance Plans (AHIP, the national trade association of health plans, President and CEO Karen Ignagni released the the statement below on the MLR proposal approved today by the National Association of Insurance Commissioners (NAIC):

“The current MLR proposal will reduce competition, disrupt coverage, and threaten patients’ access to health plans’ quality improvement services.”
Analysis
It isn't too surprising that insurers and broker/agents would disagree with the NAIC on the Medical Loss Ratio rules. As things are implemented the NAIC may review and tweak things a bit. These are model rules that individual states can choose to follow verbatim, or some regulators may decide to be more lax, and others may opt to be more strict. In any regard it will be interesting to see if these final rules are altewred in any way going foreward. At the moment it seems compromise or dialing them back is unlikely.