By Elizabeth Festa
The state of Florida continues to carry the banner of health insurance agents on the medical loss ratio issue
, asking federal health regulators to review its decision not to make adjustments to the rule, as it has in some smaller states.
In a Dec. 30 letter to the U.S. Department of Health and Human Services (HHS), Florida’s Office of Insurance Regulation (FOIR) said that the provision of the health care insurance reform law limiting administrative costs to 20% of premiums is harming the Florida insurance market.
The letter objects to HHS’s Dec. 15 letter rejecting the state’s demand for an exemption from the MLR provision of the health care law, the Patient Protection and Affordable Care Act (PPACA), and asks Larsen to reconsider.
Florida’s insurance commissioner is Kevin McCarty, who is now the president of the National Association of Insurance Commissioners.
McCarty led the battle by the NAIC to have agent commissions removed from the MLR formula. NAIC commissioners supported McCarty by a narrow margin in a Nov. 23 conference call.
But, in a final rule and interim final rule issued a week later, HHS affirmed an earlier NAIC decision that included agent commissions
in the MLR.
The latest Florida OIR letter was sent to Steve Larsen, Deputy Director of the Center for Consumer Information and Insurance Oversight at HHS.
In the letter, McCarty said that, “Failure to obtain the requested adjustment will cause permanent, irreparable harm to our market and the distribution channel for health products and services.”
McCarty said in the letter that HHS has been dismissive of insurers’ testimony and announcements that they would leave the individual market and allowed significant damage to already occur.
“Since the passage of the [PPACA], Florida has not received any applications for new entrants into the individual market, and no new issuers appear to be interested in expanding into this market,” McCarty wrote.
McCarty outlined the severe impact on the agent community as a result of the HHS decision to deny the exemption.
He cited an “informal survey” as showing harm to agents as a result of cuts in agent commissions, and said the FIO intends to send notarized letters that clearly document the MLR’s impact on the agent community by Jan. 6.
The FIO has been collecting data and testimony for almost a year on the challenges to its market created by the higher MLR, which indirectly cuts off agent commission at the knees by considering those fees as part of the administrative element of the ratio and not the care portion.
McCarty portrayed the agents as consumer advocates in his letter, saying their role is to assist consumers in gaining precertifications for various medical procedures and helping consumers navigate the health care delivery system.
McCarty also issued a memo
Dec. 28 notifying Florida health insurers and HMOs that Florida has not enacted any guidance electing to use the statutory 50 employee mark as the upper limit for purposes of reporting small employer MLRs, so that, in effect the state law would be superseded by the more generous (for MLR purposes) federal PPACA definition of a small group employer as having employees between 1 and 100.
Originally published on LifeHealthPro.com