Big ‘I’ Pushes Regulators on MLR

The Big “I” continues to fight the federal Medical Loss Ratio (MLR) created by the Affordable Care Act (ACA).

Earlier this week, the Big “I” responded to a U.S. Department of Health and Human Services (HHS) notice of benefit and payment parameters for 2019. The notice contains information on what changes HHS plans to make to the federal exchanges.

For 2019, HHS announced plans to make changes designed to make the MLR adjustment process less burdensome on states, and enable states to develop innovative solutions for stabilizing the individual markets. The Big “I” believes the proposal is a step in the right direction, but further recommends that HHS amend regulations regarding the MLR’s treatment of agents and brokers.

Beginning in 2011, the ACA required insurance companies in the individual and small group markets to spend at least 80% of premium dollars on non-administrative expenses. Insurance companies in the large group market must spend at least 85% of premium dollars on non-administrative activities.

The purpose of the MLR is to limit the amount insurers spend on administrative expenses to increase the value of health care dollars for consumers. However, the rules HHS put in place to implement the MLR inappropriately classify agent and broker commissions as an administrative expense. This has contributed to insurers significantly reducing and eliminating commissions for agents and brokers who sell health insurance in the individual and small group markets.

In its letter, Big “I” urged HHS to reconsider the rules that regulate the MLR to treat agent and broker commissions appropriately by eliminating them from the MLR. The Big “I” will continue working with HHS and Congress on issues related to the MLR.

Jennifer Webb is Big “I” federal government affairs counsel.