This week we are asking all members to weigh in with their state insurance commissioners, urging them to exempt “pass-through” fees from Medical Loss Ratio (MLR) calculations, as well as to adhere to the statutory language of the health reform law in exempting most federal taxes from the MLR equation.
As you know, the new health reform law charges the National Association of Insurance Commissioners (NAIC) to establish uniform definitions and standardized methodologies for calculating sanctioned uses of premium dollars and activities of health insurance carriers in implementing the 85% MLR in large-group plans (101 employees or more), and 80% MLR in small group (one to 100 employees) and individual markets. These MLRs are effective January 1, 2011.
NAHU staff has been very engaged with NAIC meetings and deliberations on this all important topic of MLR definitions, and pressing our views on how MLRs will affect access to agent/broker services, insurance access and affordability, as well as solvency regulation.
But we need all of your help today to contact your state insurance commissioner and urge that they not include fully-disclosed pass-through fees collected by carriers in MLR calculations, and that they not yield to outside pressures to somehow include certain federal taxes (expenses beyond the control of insurance carriers) in the MLR calculations in contravention of the specific statutory language of the Patient Protection and Affordable Care Act (PPACA).
Carriers today routinely collect funds that are passed‐through to agents as an operational convenience to their members. Particularly in the small business and individual market, health plans include commissions in their premiums, but pass 100% of these funds along to agents.
It would be counterproductive and harmful to broader health insurance reform efforts for the MLR provisions to eliminate this sort of cost‐saving administrative conveniences which carriers provide to their members.
Additionally, as many NAHU members know, the PPACA specifically excludes federal and state tax payments made by insurance carriers (costs that are beyond their control) as part of the revenue calculation in determining sanctioned MLR levels. But now a group of Democratic Congressional leaders is saying the legislative intent of the bill was that insurers only subtract taxes on revenue that relates directly to providing health coverage. They contend that traditional income and payroll taxes shouldn’t be subtracted. Obviously, if this re-writing of the law were followed, it would mean that federal taxes would eat up and crowd out desired medical care and quality improvement spending by health plans.
Thank you in advance for taking a few moments to contact your insurance commissioners TODAY. The NAIC is very close to finalizing its MLR definitions, so your timely participation in this Operation Shout is greatly appreciated!!
Click here to take action now!