HHS issued its Interim Final Regulations for Medical Loss Ratios on December 1st. Not surprisingly, there will be no Christmas for insurance agents and brokers (excuse me – I mean producers). As the Center for Consumer Information & Insurance Oversight (CCIIO not EIEIO) describes the regulation in its Fact Sheet:

“Beginning in 2011, the law requires insurance companies in the individual and small group markets to spend at least 80 percent of the premium dollars they collect on medical care and quality improvement activities.  Insurance companies in the large group market must spend at least 85 percent of premium dollars on medical care and quality improvement activities.  Insurance companies must report their MLR data to HHS on an annual basis so that residents of every State will have information on the value of health plans offered by different insurance companies in their State.  Insurance companies that do not meet the MLR standard will be required to provide rebates to their consumers.  Insurers will make the first round of rebates to consumers in 2012.  Rebates must be paid by August 1st each year.”

Ironically, HHS just got done amending its rate review rules to declare that association and trusts treated as large groups under Washington state law must be viewed as small group if the association members are small employers. When associations were still considered a large group, the insurer would have been required to pay out at least 85% of premium in benefits. But, now that an association is measured by each member and may be small group coverage, the insurer is required to pay out 80% of premium in benefits. That’s moving the ball forward!

The agency was unmoved by the sharply divided NAIC vote urging HHS to consider the consequences of including insurance producers in the MLR calculation. The NAIC resolution asked for an adjustment to the MLR that would make room for the value producers add to the health plan purchasing process. But for many consumer advocates and regulators, payment for the service of producers amounts to little more than excess cost to be squeezed out.

Not to worry though, I am sure that the new “navigators” hired by health insurance exchanges to help purchasers can more than make up for the loss of seasoned producers. After all, health plans are pretty much the same and price should be the only consideration. Oy!