More MLR Action

The Patient Protection and Affordable Care Act (PPACA)’s medical loss ratio requirements (MLR) continue to be a hot topic, both at the federal level and in the states. Over the past week we have seen MLR action by Congress, the federal Department of Health and Human Services (HHS), the National Association of Insurance Commissioners (NAIC) and individual states.

On Thursday, Senator Mike Enzi (R-WY), ranking member of the Senate Health, Education, Labor and Pensions Committee, sent a letter to HHS asking the department to formally submit their medical loss ratio rule, which limits insurers’ profits and administrative expenses. Enzi charges that HHS never properly submitted the rule to Congress, thereby denying the senator a chance to offer a motion of disapproval to potentially overturn the regulation. HHS officials say that they did send Congress the rule, and they have receipts showing that it was received. However, Enzi has responded that “According to the Senate parliamentarian, the rule was never formally submitted by the vice president’s office, and thus has never been referred to a committee.” This breakdown in the process, Enzi’s staff says, means that Republicans never got their shot at overturning the rule, and that they may be able to raise the issue again now. Using parliamentary tactics, Enzi hopes to have regulation overturned with just a simple majority in the Senate. It’s unclear at this time what chance at success this effort may have.

In addition to responding to Senator Enzi’s charge, last week HHS issued a new seven-page guidance statement on their interim MLR rule, mostly geared at health insurance carriers and their compliance efforts.

Meanwhile, the NAIC‘s Health Reform Actuarial Working Group issued its preliminary report on the data it has been collecting relative to the impact the MLR requirements have had on agents and brokers, as well as on consumers and their access to professional health insurance advisors. The actuaries spent the past month reviewing data on commissions and concluded that there was no pattern of commission increases or decreases in 2009 and 2010, but that there was a significant drop in commissions, particularly first-year commissions, beginning in 2011, or when the MLR requirements began. The group will finalize its report this week and send the information to the NAIC’s Health and Managed Care (B) Committee and Health Insurance Advisors (EX) Task Force for additional policy action.

At the same time, the states have been busy with MLR efforts of their own. In the past week, both Indiana and Delaware have applied for state MLR waivers for their individual markets. Indiana has requested a four-year phase-in from their current 55 percent individual market MLR threshold, and has also asked for its waiver to be extended to consumer-directed small group policies, even though HHS has repeatedly already asserted their waiver authority does not extend to the small group market. Delaware would like to get a 65 percent MLR in 2011 and gradually move up to 70 percent in 2012 and 75 percent in 2013.

These state actions were followed by a letter released on May 19 by several conservative groups, including Let Freedom Ring and Americans for Tax Reform, calling on states to apply for medical loss ratio waivers for their individual market as a means of protecting health reform implementation.

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