HHS Rejects Call For Broker/Agent Compensation To Be Excluded From MLR

HHS decided not to make changes to how broker and agent compensation is classified in the health reform law’s Medical Loss Ratio’s calculation, something sources had expected despite strong lobbying from brokers and agents for commissions to be carved out and the National Association of Insurance Commissioners’ recent adoption of a resolution calling for the department’s final rule to change how the commissions are treated.

In the days before the final rule was released on Friday (Dec. 2), sources told Inside Health Policy that it would have been difficult for HHS to not adhere to its original guidance, which includes broker and agent commissions as an administrative expense under MLR. They added, though, that there is a valid concern that leaving commissions in the MLR formula could hurt consumers’ ability to use brokers.

Broker compensation is a low priority for HHS, which is dealing with intense pressure on various other issues in the law, said Michael Main, with management consulting firm Oliver Wyman, prior to the rule’s issuance Friday. Another source expected that the final MLR rule would mostly include technical changes and HHS would not likely change provisions on broker compensation.

The health reform law requires that insurers achieve an MLR of 80 or 85 percent, and if they do not meet the thresholds they will have to pay rebates to consumers beginning in 2012.

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