A bipartisan, companion Senate bill to the House bill excluding insurance agent compensation from medical loss ratio (MLR) calculations will be introduced in a few days, although the political environment makes its passage uncertain.

Janet Trautwein

Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU), said at the organization’s conference in Washington, D.C., Jan. 26 that the Senate bill will be sponsored by Sens. Mary Landrieu (D-La.), Ben Nelson (D-Neb.) and Johnny Isakson, (R-Ga.).

Another Republican is expected to sponsor the bill soon, Trautwein said.

The House bill, H.R. 1206, or the Access to Professional Health Insurance Advisors Act of 2011, would amend the Public Health Service Act to exclude producers’ compensation from administrative cost calculations for purposes of calculating the medical loss ratio of a health insurance plan.

Since the implementation of the MLR in January 2011, health insurance agents and brokers have seen their commissions fall by up to 50%, according to the nonpartisan U.S. Government Accounting Office.

Despite a recommendation from the National Association of Insurance Commissioners (NAIC) to exempt agent commissions from the MLR, a federal official at the NAHU conference was not optimistic about regulatory changes to the provision.

“We don’t see an avenue to modify or delay the MLR regulation; we don’t see a regulatory fix there,” Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services’ (HHS) Centers for Medicare and Medicaid Services, said at the conference. “In the end, the NAIC also reached the same conclusions when they came to us with their recommendations regarding the MLR.”

Larsen said that his department “extensively” reviewed methods of changing the MLR regulation and had ongoing discussions with NAHU officials and the NAIC, representing all state insurance commissioners, as well as a review by HHS in-house lawyers.

An insurance lobbyist, who represents health insurance agents, and attended the conference responded to Larsen’s comment.

“While I respect Steve Larsen for speaking to an audience that has been savaged by the medical loss ratio provisions of the Patient Protection and Affordable Care Act,” Vince Phillips, insurance industry lobbyist and president of Harrisburg, Pa.-based Phillips & Associates, told IFA, “I am amazed at the hubris HHS shows in ignoring a formal resolution passed by the NAIC saying that agent compensation should not be factored in to MLR, by ignoring letters from Senator Landrieu and others. Perhaps HHS should do a head count on the members of Congress sponsoring H.R. 1206 before they decide to ignore the United States Congress as well. I never used to believe that government could be so non-responsive, but apparently the policy people at HHS want to implement their own agenda regardless.”

The NAIC adopted a resolution Nov. 22, 2011, asking Congress and the HHS to consider legislation amending the MLR provisions of the PPACA.