Posts Tagged ‘National Association of Insurance Commissioners’

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Spring NAIC Meeting: Insurance Commissioners Take Houston

Thursday, April 11th, 2013

This past weekend, insurance commissioners and their staff, along with insurance companies, brokers, other industry representatives, and a few intrepid consumer representatives gathered at the Spring meeting of the National Association of Insurance Commissioners (NAIC) in Houston. While the meeting did not hold as may controversies as in the past, there were discussions on a few important topics that give us an idea of what insurance departments are thinking about as we near open enrollment and full implementation of the ACA.

The Consumer Information working group has turned their attention to developing materials for insurance departments’ use in working with consumers on questions and complaints. Through a collaborative project with consumers, insurers, and regulators, that committee compiled a list of likely questions from consumers and is working on drafting responses. The goal is to finalize this information by July.

The NAIC is also starting to look at their role in overseeing the insurance market as the ACA rolls out. One of the most important jobs of state insurance departments is to conduct oversight of health insurers and make sure they comply with the law. But right now, most insurance departments don’t have the processes and structures in place to collect data (e.g. consumer complaints), track and analyze the data, and conduct audits for ACA-specific reforms. A small working group at NAIC will attempt to develop a market oversight framework that DOIs can implement in their own states.

Finally, discussion at a number of working groups turned back to the role of Navigators. As we have discussed in this blog, Navigators play a critical role in providing unbiased information about health plan options to consumers and in working with people through the application and enrollment process. Exchanges must train and certify Navigators to ensure they are capable of performing these duties. A recent proposed rule clearly outlines the differences between Navigators and brokers.

However, the broker community continues to pursue further regulation of Navigators at the state level, some of which could have a chilling effect on the number of community-based organizations that apply to be Navigators. For instance, many argue that Navigators should be required to be licensed or carry errors and omissions coverage to practice in a state.

A number of consumer representatives responded to the broker arguments, arguing that while it is true that Navigators must be trained and certified, additional state requirements could be duplicative or overly onerous. Navigators already must pass an exam and undergo extensive training. The consumer representatives underscored the need for unbiased help with the numerous options available in the ACA and, with millions newly eligible for coverage, there will be more than enough work for everyone to have a role. Unfortunately, not all of the commissioners are yet on board with the consumers’ perspective.

The NAIC will continue to work on these issues between now and their next meeting over the summer. There is much to do in a short time frame – stay tuned.

Christine Barber, Senior Policy Analyst

 

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Cross Post: Summaries of Insurance Benefits and Coverage will Help Consumers Comparison Shop

Wednesday, September 26th, 2012

This entry was originally posted on the Center on Health Insurance Reforms at Georgetown University Health Policy Institute’s CHIRblog.

As of September 23, the “wild west” of shopping for health insurance coverage has been at least partially tamed, thanks to the Affordable Care Act (ACA). Consumers can now get standardized, simplified summaries of benefits and coverage (SBC) that will help them understand what’s covered by an insurance policy and allow them to make apples-to-apples comparisons among plan options. These summaries are modeled on the labels we use to compare ingredients in our food, and are designed to be easy to read, with medical and insurance terms that are defined in a standard, easy-to-understand way. According to public opinion tracking polls by the Kaiser Family Foundation, this provision is one of the most popular provisions in the ACA.

For me, these forms are the culmination of hundreds of hours of effort as part of a statutory working group tasked with developing the templates for these forms. Put together by the National Association of Insurance Commissioners (NAIC), the working group represented state insurance regulators, consumers, insurance companies, health care providers and insurance brokers. We spent over a year working through the content and format of the form, and the Obama Administration adopted our recommendations with very few changes.

The U.S. Department of Health and Human Services (HHS) notes the following important details about the SBC:

  • • The provision applies to ALL health plans, whether you get coverage through your employer or purchase it directly, starting September 23, 2012.
  • • Insurers need to provide the SBC to consumers at the time they apply for coverage, and to enrollees upon renewal.
  • • The form includes coverage scenarios for two common situations: normal delivery of a baby and treating type 2 diabetes. These scenarios can give interested consumers an approximate picture of their future out of pocket costs under the policy.
  • • Non-English speakers can request the SBC in their native language – insurers are required to translate the form into common languages such as Spanish and, in some states, Chinese, Tagalog and Navajo.

Consumers’ Union has provided a very helpful “explainer” on the SBC, you can check it out here. Going forward, it will be interesting to see how accessible the forms truly are for consumers, and whether and how consumers use them to shop for insurance. I’m hopeful these forms can help empower consumers with better information so they can make better decisions about what coverage is best for themselves and their families.

For information on developments like this—and much more—be sure to check in with CHIRblog‘s series on “Implementing the ACA.”

– Sabrina Corlette, Georgetown University Center on Health Insurance Reforms

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NAIC August Meeting: A Few Fireworks at a Mostly Humdrum Meeting

Wednesday, August 15th, 2012

Guest Blog

The National Association of Insurance Commissioners (NAIC) held its annual summer meeting in Atlanta this past weekend. The meeting was striking more for what was not accomplished than for what was. State health insurance commissioners have an extraordinary amount of work to do before the full range of Affordable Care Act reforms goes into effect on January 1, 2014, but you couldn’t tell from their leisurely approach at this meeting. While many commissioners are eager to move forward with implementation, the NAIC effectively bowed to the political reality that, for most, little will be done before the November elections.

Whether it was about setting state rules for health insurance Exchanges, issuing model state laws to implement the 2014 private insurance reforms, closing loopholes in the law that could harm small businesses and individual consumers, or devising a plan for consumer outreach and assistance, NAIC members largely chose to kick the can down the road. In at least one case, a planned discussion about oversight of the ACA’s private insurance reforms was scrubbed from the agenda because members simply didn’t want to talk about it. So what did happen?

Here are a few highlights from the meeting:

• The NAIC consumer representatives released a comprehensive report with recommendations for state and federal officials on the 2014 private insurance reforms. This guide to consumer-friendly implementation covers critical consumer protections such as prohibiting discrimination against people with pre-existing conditions and the minimum standards for essential health benefits (EHBs).

• The working group on Health Insurance Exchanges agreed to discuss the need to educate and engage consumers in time for open enrollment periods starting October 1, 2013, but delayed this discussion until some point in the future. Previously, the Exchange group had adopted five white papers to help state officials certify and provide ongoing oversight of exchange health plans. Also at this meeting, the NAIC agreed to create a working group designed to provide assistance to states likely to have a federally facilitated exchange.

• The NAIC’s task force charged with developing a model state law to implement the ACA’sprivate insurance reforms (i.e., guaranteed issue, community rating, and the prohibition on pre-existing condition exclusions) discussed two new drafts, one for individual market reforms and one for group market reforms. But the task force did not vote to advance the models and, instead, will possibly schedule some conference calls this fall to refine them.

There were also some disappointments. Since last year, the NAIC has been examining the sale of stop-loss insurance to businesses that self-insure their employees’ coverage. “Stop-loss” coverage helps protect a self-insured employer from facing potentially ruinous costs if employees have higher health care needs than expected. Although self-insurance with stop-loss coverage has historically been the province of large businesses of 500 or more employees, since the passage of the ACA, some insurers have aggressively marketed self-insurance to smaller employers with young and healthy employees, often with stop-loss policies that effectively insulate the employer from real risk. These insurers are successfully selling these plans as a cheaper alternative because they help employers escape many of the ACA’s consumer protections, including coverage of essential health benefits, the medical loss ratio requirements, and the examination of unreasonable rate increases.

Unfortunately, what many employers don’t realize is that, if they have one or more employees who get sick, the insurer can dump them – the coverage is not guaranteed to be renewed like traditional health insurance. The NAIC consumer reps have urged NAIC to address this loophole in the ACA by encouraging states to regulate the sale of stop-loss coverage. The consumer representatives stressed that the NAIC’s failure to act could destabilize the state Exchanges as the only place sicker small businesses can enroll in coverage and could hurt small businesses and consumers. Although some NAIC commissioners agreed that fixing the problem should be a “no brainer,” the NAIC essentially deferred the issue until after the election. Many state commissioners were lobbied hard by insurance companies who sell stop-loss policies, and by brokers who expect to see future commissions. The issue has been incredibly contentious – probably because there is so much money at stake for the insurers.

Speaking of contentious, the broker community is pursuing greater regulation of organizations that could become Navigators under the ACA. They argue that would-be Navigators should be required to obtain a license and be subject to oversight by each state’s Department of Insurance (DOI), like a broker would. They also say Navigators should be required to register with the National Producer Registry, a databank that tracks brokers state-to-state. The consumer representatives agree with brokers that Navigators need intensive education and training and meaningful oversight by the Exchange or DOI to ensure they are meeting people’s needs. But many of the brokers’ proposals would erect insurmountable barriers to becoming Navigators, particularly for small, community-based non-profits.

Unfortunately brokers have a very sympathetic ear from many of the state commissioners. The NAIC committee responsible for the regulation of brokers ultimately took no action at this meeting, but the NAIC consumer representatives are concerned that states will move forward with overly onerous requirements for Navigators – which could limit the reach of the immense amount of much-needed outreach and assistance. The NAIC is unlikely to take much concrete action on any of these issues before November, when their next meeting will be held in Washington, DC. Unfortunately, this delay may be too little too late for consumers.

Sabrina Corlette,
Research Professor and Project Director
Center on Health Insurance Reforms
Georgetown University Health Policy Institute

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NAIC Commissioner’s Fall Back on Medical Loss Ratio

Wednesday, November 9th, 2011

You know that expression, “Fool me once, shame on you. Fool me twice, shame on me”? Well, it came to mind this past week at the National Association of Insurance Commissioner’s (NAIC) fall meeting in Washington, DC. Just as in March, during the NAIC’s spring meeting in Austin, the NAIC consumer representatives were lulled into a false sense of complacency. “This will be a quiet meeting,” everyone said. “No votes on health care issues.” And that Task Force that had taken up the cause of insurance agents and brokers last summer to push for removing agent compensation from the medical loss ratio (MLR)? “They’re not even meeting,” we were told. “NAIC is done with that issue,” they said.

Imagine our disappointment and surprise when rumors started to swirl Thursday afternoon—the first day of the conference—that the commissioner from Florida planned to introduce a resolution at the NAIC’s final plenary meeting, urging Congress to consider and adopt legislation to “preserve consumer access to agents and brokers.”

When we finally saw a draft, the resolution was alarming. It ignored the considerable data collected by the NAIC’s actuarial task force over the summer, as well as the thoughtful recommendations they had developed. If it passed, it could have given momentum to H.R. 1206, which renders the medical loss ratio (MLR) requirements in the Affordable Care Act (ACA) effectively useless as a tool to help consumers get greater value for their health care dollar.

Once again, the consumer representatives swung into action, alerting the media and networks of advocates in the states. Alerts went out, urging consumer groups to contact their state insurance commissioners and let them know they opposed the resolution. The good news: the advocacy worked. NAIC’s membership agreed to delay a vote on the resolution. The bad news? The issue could come back up on a call scheduled for November 22, which consumer representatives will closely monitor. However, a number of commissioners raised sufficient concerns about the lack of notice that NAIC is likely to revisit their rules for bringing up last-minute resolutions.

MLR wasn’t the only thing on the Commissioners’ minds last week. The subgroup on Exchanges, chaired by Commissioner Sandy Praeger (of Kansas), also met. They heard testimony from one of our own consumer representatives, Sarah Lueck from the Center on Budget and Policy Priorities. She did a great job outlining the importance of a seamless experience for consumers as they seek eligibility determinations and make decisions about enrolling in health plans. The subgroup appears poised to take up model regulations for Exchanges, based on the rulemaking coming out of the United States Department of Health and Human Services (HHS).

In another important development, the regulatory framework task force has begun work on a model state law to implement some of the Affordable Care Act’s 2014 insurance reforms (i.e., guaranteed issue, modified community rating, and elimination of pre-existing condition exclusions). The draft currently applies only to the group insurance market, but members discussed adding individual market reforms as well. Getting this right is really important, because this model law is likely to be the framework many states use to adopt the central reforms of the ACA. The NAIC is taking comments on the first draft, and we would encourage consumer groups to submit comments, particularly those of you from states with protections that are stronger than the minimum standards set by the ACA.

In addition, the NAIC’s health actuarial task force is taking up some challenging topics that will have direct bearing on the success of the ACA:

  • – They will be working with HHS to develop “state-specific” thresholds for reasonable health insurance rate increases. Under the rate review rule, HHS is currently using a national standard of 10 percent (if a rate increase is 10 percent or greater, it triggers an automatic review). Starting in 2012 they will transition to state-based thresholds to better reflect local market conditions.
  • – They will work on recommendations to HHS and states for the ACA’s “3 Rs”—risk adjustment, reinsurance, and risk corridors. Their most immediate task is to finalize comments on a white paper HHS released in September.
  • – They will review data on the use of self-insurance by employers, particularly smaller employers and assess whether it is increasing as a result of the ACA’s insurance reforms. This will be an important study. A number of insurance companies are becoming more aggressive in marketing self-insurance to small businesses, because it allows them to escape key insurance reforms (such as the essential health benefits package and the modified community rating).

Last but not least, I was surprised to hear a couple of broker groups take time out of their Industry Liaison meeting agenda to complain about the NAIC’s consumer representative program. They argued that the consumer reps weren’t “diverse” enough in terms of our perspective on the ACA, complained the media mistakenly report that we speak on behalf of the NAIC, and even suggested many of us have a conflict of interest because some day we might – gasp – take grants to serve as Navigators. For myself, I take their whining as a badge of honor. The fact that they would take the time to complain about our small band of consumer reps suggests that we’re actually having an impact at NAIC.

—Sabrina Corlette, Research Professor
Georgetown Health Policy Institute

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An unexpected win for consumers at NAIC

Monday, March 28th, 2011

There’s been lots of drama at this year’s first meeting of the NAIC (National Association of Insurance Commissioners) in Austin, TX – way more than any of us consumer representatives to the NAIC expected. The good news, as you may have heard by now, is that the NAIC decided to delay a vote to endorse Congressional legislation that would remove broker commissions from the Medical Loss Ratio (MLR). But that outcome seemed like a pipe dream when the NAIC’s consumer representatives first landed in Austin on Thursday night.

Consumer reps had all been told for weeks that nothing was going to happen at this meeting, no votes would be taken, there’d be just a few hearings – that’s all. So when we got word just the day before we arrived that a number of Commissioners were pushing hard to endorse the Rogers bill we were all taken off guard. Even more alarming, we heard from a number of sources that support for the brokers’ position was so strong the vote was almost a “done deal.”

But after intense advocacy by all sides, including from many consumer groups all around the country, the NAIC decided to take another look at the proposal. After all, not only is it likely that the Rogers bill would result in premium increases for consumers, but there’s simply no evidence that consumers or small businesses are suffering from a lack of access to brokers, or whether reductions in broker commissions are actually a result of the MLR. The only state to provide before and after data on MLRs – Colorado – showed that broker commissions were cut from 20 percent to 10 percent of the premium, suggesting they were way above market norms to begin with.

The NAIC’s health committee will now take a few weeks to actually analyze data in the market about broker commissions and the impacts on consumers and small business owners. We think this is the right approach, and applaud NAIC for taking a more thoughtful and deliberative approach.

Addressing broker compensation is not the only thing NAIC was up to this weekend. The meeting kicked off on Friday with a hearing on health insurance Exchanges. The Exchange Working Group heard testimony from Medicaid experts about some of the very challenging issues states are facing to effectively coordinate public programs with the commercial insurance markets, and got demonstrations of Utah and Massachusetts’ web-based health plan finders. Both states have clearly put a lot of work into designing a web interface that is consumer friendly. That said, by emphasizing how easy their process is for employees, Utah’s presentation was slightly misleading. They neglected to mention that enrollees need to undergo health status underwriting before they can access the website, and they glossed over the difficulty many employees have in choosing a plan among more than 100 different product options.

Joel Ario, head of the Exchange division at HHS’ Center for Consumer Information and Insurance Oversight (CCIIO) also testified. He was asked a number of questions about the feds’ plans if a state doesn’t set up its own Exchange. Ario indicated that HHS has been working on a federal fallback plan, but that HHS does not intend to produce a one-size fits all model. And even if they do have to set up a federal Exchange, HHS would have every intention of working with the states to tailor the Exchange to states’ markets and ensure coordination with state-run public programs such as Medicaid and CHIP.

Next up for the Exchange group is to finalize white papers on issues like financing, adverse selection, and Navigators, as well as to issue additional draft white papers on governance and active purchasing. NAIC consumer reps have submitted extensive comments, and will continue to try to shape NAIC’s recommendations on these issues.

Last but not least, NAIC is looking ahead to 2014 and has a task force working to develop a model state law to implement reforms like elimination of pre-existing condition exclusions, the new premium rating rules, and guaranteed issue. They hope to have a model law adopted by the end of this year, which is pretty darn ambitious.

As for the proposed broker bill, we have a short four to six week reprieve before NAIC takes it up again – and consumer advocates will need to continue to make sure their voices are heard during this process.

– Sabrina Corlette, Research Professor at the Health Policy Institute
Georgetown University

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Cross Post: Insurance Commissioners Respond to Consumer Concerns

Friday, October 22nd, 2010

This blog was originally posted on Say Ahhh! A Children’s Health Policy Blog

By now many of you have probably heard about the big news coming out of the NAIC meeting this week in Orlando. After seven months of intense debate and negotiation, the NAIC voted in favor of a regulation defining the ACA’s required “medical loss ratio” (MLR). They rejected several amendments that were heavily pushed by insurance companies and brokers, scoring a big win for consumers who deserve better value for their health care dollar.

What hasn’t been reported so widely is all the other work NAIC did this past week, from advancing model state laws on major consumer protections required by the ACA, developing a model law on state insurance exchanges, and defining how an insurer must justify an “unreasonable” rate increase. Here are a few highlights:

– A key NAIC task force adopted model state laws implementing three market reform provisions of the ACA: rescissions, young adult coverage up to age 26, and choice of health professional. These now will be reported up to the NAIC’s “B” Committee, which is the umbrella committee for health issues. The same task force is also developing model laws on: lifetime/annual limits, elimination of pre-existing condition exclusions for children under 19, access to preventive benefits, and grievances and appeals, all of which are ACA provisions that went into effect on September 23, 2010.

– Consumer representatives are urging changes to the model law on the kids’ “pre-ex” provision to encourage states to prevent “child only” health plans from withdrawing from the marketplace. We also made formal presentations applauding Commissioner Sevingy from New Hampshire and Commissioner Kreidler from Washington for their leadership and toughness in requiring their states’ insurers to offer coverage to kids.

The consumer reps also pushed for better notice requirements for health plans that have received a waiver from the ACA’s restrictions on annual benefit limits, so that consumers know that the plan doesn’t provide the full range of consumer protections promised under the health reform law. The NAIC’s working group on state insurance exchanges also met in Orlando. They’ve received a whopping 200+ pages of comments on their first draft of a model state law and sometime within the next two weeks they’ll schedule a conference call to receive oral comments. A few issues were raised in the meeting that are worth watching:

– Coordination with Medicaid. My impression is that the model law will probably not delve into the tricky issues of how the exchanges will coordinate with state Medicaid agencies. When one of the Commissioners asked about this, the chair of the work group, Commissioner McRaith from Illinois, said that they have not been working with Medicaid Directors, and emphasized that it would be a “NAIC Model” and therefore would focus on insurance-related issues.

– Dual regulation. The members of the work group were very concerned about exchanges potentially usurping their traditional role regulating health insurance through rate review, market conduct exams and grievances. They’ll probably add new language to the model that will have a more clear delineation of regulatory roles between state insurance departments and the exchange.

– Pediatric dental. The current draft model doesn’t have any language reflecting the ACA’s provision allowing the inclusion of stand-alone dental plans that offer pediatric dental benefits in the exchange. A representative from Delta Dental pointed that out to the group and Commissioner McRaith asked him to submit legislative language. The consumer reps will keep an eye on this issue as it develops.

– Another key NAIC task force has been working for many months to develop the form that insurance companies will have to fill out if they are proposing an “unreasonable” rate increase. This form will provide unprecedented transparency on rate increases, and will include essential information for consumers and employers to better understand the factors driving proposed increases. The task force finalized the form this week and reported it to the “B” Committee, in spite of last-minute opposition from America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association. Even in the face of many hours of open and inclusive conference calls and meetings, both trade associations claimed that the form had been developed without sufficient industry input.

– Last but not least, the NAIC has created a new working group to tackle the issue of limited benefit plans, or “mini-meds.” A joint effort of the “B” Committee and an anti-fraud committee, the group will investigate whether plans are making misrepresentations about their products and whether they are being sold by unlicensed brokers. Because many of these plans provide little or no real coverage if someone actually gets sick, the group will also be looking into the “utility” of these products for consumers.

– Sabrina Corlette, Georgetown Health Policy Institute

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The Insider: ACA Implementation: Partly sunny with a (Supreme) chance of rain

Thursday, October 21st, 2010

This week brought some important developments in ACA implementation. First and foremost is the major win by consumer advocates in the prolonged and multi-pronged struggle to shape NAIC recommendations on Medical Loss Ratios. At the NAIC meeting in Orlando today, consumer advocates beat back attempts by brokers to exclude commissions from the definition of medical expenses, blocked insurers from using high-loss ratios in one state to paper over a failure to meet standards in another, and created a reasonable standard of certainty to establish whether an insurer’s failure to meet the loss ratio was due to under-spending on medical care or unforeseeable random events.

These decisive wins are a case example of the one-two punch that advocates will need in order to influence the numerous federal and state decisions ahead. The consumer victory resulted from the combination of persistent policy advocacy, especially by the NAIC consumer representatives, coupled with a national effort by consumers to reach out to their insurance commissioners and let them know that people were watching (illustrating one of the important axioms of grassroots advocacy: decision makers make different — and better — decisions when they are being watched).

The second key development, while less positive, also contains within it an important strategic dimension. Last week, the Florida District Court issued a decision allowing the case against the individual responsibility clause of the ACA to go forward. Specifically, the Florida court will hear arguments about whether the individual responsibility requirement is legal under the Commerce Clause. The court also will hear arguments about whether the Medicaid expansion under the ACA exceeds Congress’ authority, although Judge Vinson’s decision makes it clear that he considers this argument to be much weaker than the individual responsibility claim. Because Judge Vinson rejected the federal government’s argument that the penalty for not having health insurance constitutes a tax, the focus of the Florida case is squarely on the Commerce Clause argument. Just a week earlier, a District Court in Michigan ruled that the individual responsibility requirement was Constitutional. Whether Florida (and Virginia) ultimately agree with the Michigan ruling, the issue is likely heading for the Supreme Court, which should be enough to give anyone concerned about the sustainability of the ACA a few sleepless nights (especially since the wife of one Justice is actively campaigning for repeal).

But while legal scholars slug it out and try to second guess the next round of rulings, it is important for advocates not to lose sight of the intertwining of the political and legal issues since most advocates will not be able to intervene directly in the legal proceeding.

First, the court cases keep public attention focused on the individual responsibility requirement, which is one of the least popular provisions of the law. The lawsuits also encourage doubt over whether the law will actually be implemented in its current form and potentially give cover for foot-dragging by state administrations inclined to oppose implementation.

The court actions not only affect the political debate, they are also affected by it. The political backdrop against which the Supreme Court makes its final decision is extremely important. To the extent that the law is considered unpopular and there is an active movement for roll back, it will create a context in which a negative legal outcome is considered more palatable.

The key takeaway for supporters of reform is that whether we are looking at how the court cases affect the political debate or how the political debate affects the courts, the response of advocates must be to keep working to create a context of support for the law and expectation that it should and will move forward.

Overall, the events of the past week underscore both the need for and the potential of sustained consumer engagement.

— Michael Miller, Policy Director

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Consumers Win on MLRs!

Thursday, October 21st, 2010

In the final showdown at the NAIC meeting, Insurance Commissioners listened to consumer advocates and took a firm stand on medical loss ratios (MLRs). After a furious week of lobbying by both the insurance industry and consumer advocates, the MLR definition passed without any amendments. This is a critical win that underscores the importance and influence of consumer advocacy on implementation decisions.

The amendments were filed on two issues — national aggregation (filed by Florida) and broker fees (by Ohio) — but were withdrawn after discussion among the Commissioners. An amendment on the most contested issue of late, credibility adjustments (also filed by Ohio), failed to pass by a vote of 34 to 19 (with one abstention).

The final vote to support the MLR definition was unanimous — thanks in large part to the hard work of consumer representatives on the NAIC and advocates around the country who supported them and reached out to their Commissioners on these issues.

Congratulations to all who worked to ensure this victory. It is a great example of how a concerted effort by consumers can have great impact! Next step: HHS approval!

– Christine Barber, Senior Policy Analyst

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MLRs — Going South?

Wednesday, October 20th, 2010

Our sources at the National Association of Insurance Commissioners (NAIC) meeting in sunny Orlando sent an update on the storm brewing over the medical loss ratio (MLR) definition. For those of you new to MLRs, it’s been a long seven months for all of the folks embroiled in the efforts by the NAIC to define what are medical expenses versus profits or administrative expenses. Up until now, the NAIC has carefully worked to adhere to federal law and balance the interests of industry and consumers. But in Florida, those calm skies are growing cloudier as the final vote nears tomorrow morning.

The insurance industry has been pulling out all the stops the past few weeks to undermine the carefully woven fabric of the MLR regulation crafted by the NAIC sub-committees. Their threat to Commissioners: We will pull out of your insurance market and leave your residents without any options – a low blow considering the industry agreed to the compromises made on these very issues just months ago.

Insurance Commissioners are mostly non-committal as they prepare to file amendments to the MLR tomorrow and then have another commissioner-only discussion. The whole definition is up for a vote on Thursday. What should be clear to all is that if the amendments pass, the entire MLR will be meaningless and consumers will not benefit from the potential changes.

First up is national aggregation: Some national insurers are seeking aggregation, or pooling all of their MLRs across state lines for certain insurance markets. This would mean that if an insurer is in a state with a low MLR and another state with a higher MLR – the two numbers would be averaged – leaving consumers in the dark about how much of their premium dollars are spent on health care. This change not only goes against the definition of health insurance ‘issuer’ in the federal law but could also end up making national carriers look better than their local competition.

Second are credibility adjustments for small insurers. Insurers must hit the MLR percentage the required by ACA (85% in large group and 80% in small group and individual markets), or provide rebates to policyholders. There has been much discussion at NAIC about how to protect smaller insurers that may not meet the MLR standard because they only cover 1,000 people and random events (like few filed claims) affect their MLR, rather than their spending on administration and profit.

Previously, everyone agreed to the solution to adjust the MLR of these small carriers – like a handicap in golf – called a credibility adjustment. This is done through actuarial calculations based on a “confidence level.” Basically, the confidence level is the amount of certainty that insurers tried to meet the MLR in good faith, but that random events prevent them from meeting the MLR target. The bottom line is that a higher confidence level means a much weaker MLR standard. The draft regulation crafted by NAIC workgroups allowed a 50 percent confidence level. The issue was heavily debated, and the actuaries agreed that 50 percent made the most sense mathematically and from a policy perspective.

However, there is now a last-minute push to move the confidence level up to 80 percent, and to expand its reach to insurers that cover up to 75,000 people. As an example of how this would play out, every health plan in New York would qualify for a credibility adjustment and would gain between 10 and 25 percentage points on their MLR without actually streamlining anything but maintaining the status quo. Insurers will have a much easier time meeting ACA’s target for MLR, without reducing administration and profit.

Third, counting broker fees in the MLR calculation. There is a move afoot to take broker commissions out of both the premium and the administrative expense component of the MLR. This could be damaging to consumers. Broker fees need to be counted toward administrative expenses and profits.

Right now the NAIC has an opportunity to do something transformative for consumers. Let’s give them the support they need to do so. The vote is tomorrow morning. Take five minutes and call your Insurance Commissioner today. See our latest alert for talking points and more information.

— Christine Barber, Senior Policy Analyst

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Cross-Post: Consumer Rep Previews the National Association of Insurance Commissioners National Meeting

Friday, October 15th, 2010

This blog was originally posted on Say Ahhhh! A Children’s Health Policy Blog.

Hard to believe it’s come around again but that National Associatin of Insurance Commissioners (NAIC) is gearing up for a big national meeting – this time in Orlando, Florida from October 18-21. I and my fellow consumer representatives will be packing our Mickey Mouse ears and fanning out at the big regulator-industry confab to share our views on how to make the Affordable Care Act implementation work for consumers and families. The NAIC has a lot of work packed into just a few days. Here’s a preview of what they’ll be doing and how it might impact children and families:

* Helping states implement the September 23 patient protections. NAIC’s “Regulatory Framework Task Force”, chaired by South Dakota’s Director of Insurance, Merle Scheiber, has been drafting model laws to help states implement many of the “Patients’ Bill of Rights” protections in the ACA, such as the prohibition on pre-existing condition exclusions for children under 19, required coverage for young adults up to age 26, preventive benefits, restrictions on annual limits and the ban on lifetime limits, internal and external appeals, and the prohibition on rescissions. The Task Force has almost completed its efforts, and is expected to take up final edits and changes during its meeting in Orlando on October 18. State advocates can expect that many states will use these models to craft the necessary legislation to enforce these new consumer protections. We’ll also be talking to the regulators about strategies to keep child-only plans in the market and make kids’ coverage more affordable.

* Developing an Exchange model law. The NAIC has created a new workgroup, co-chaired by Commissioner McRaith from Illinois and Commissioner Praeger from Kansas, to develop a model law for states to establish an insurance exchange. This group will be meeting on October 20th to review the draft model law and discuss possible recommendations to HHS on issues like governance, exchange functions, network adequacy, marketing standards and quality ratings. During their summer meeting in Seattle, the workgroup also agreed to create a high-level liaison group to state Medicaid directors, led by Commissioner Praeger. We’ll be eager to hear about that group’s efforts to date, particularly on how they intend to address the “no wrong door” goals of the ACA and coordination of care for low-income families that may be cycling between Medicaid and commercial insurance.

* Medical Loss Ratios. NAIC’s draft regulation to define the medical loss ratio (MLR) under the ACA was posted on October 5. It’s likely to be voted on by NAIC’s Excecutive Committee and Plenary during their final meeting in Orlando on October 21st. We’re expecting some fireworks as the insurance industry pushes back hard against some of the tougher requirements. In particular, insurance agents are asking that they be left out of the equation. The bottom line for families purchasing insurance: the MLR standard is a measure of how much a health plan devotes to actual medical care as opposed to overhead and profits. We’ll be urging the NAIC to stay strong against industry pressure to weaken the standard.

* Consumer Information. One of the most important yet least publicized consumer protections in the ACA is the requirement for more transparency in the information provided to consumers about health plan benefits, exclusions, premiums and cost-sharing. NAIC has been charged with developing the standardized definitions and summary of benefits form that all qualified health plans must provide to consumers making purchasing decisions. The NAIC’s Consumer Information workgroup, co-chaired by Superintendant Kofman from Maine and Commissioner Miller from Oregon, has been working diligently all summer on the summary form and is now awaiting the results of focus group testing. Once the focus group results are back, the group will meet in Orlando to finalize the summary of benefits form. HHS will likely then include it in a regulation expected in March of 2011. The consumer reps on this group are working hard to make sure that consumers get the information they need to make purchasing decisions that are right for their situation, without having to worry about hidden contract language that leaves them financially vulnerable when they need care.

The NAIC meetings are open to registered participants, but the travel, hotel and fees are a significant expense. Advocates for children and families are welcome to contact any of the NAIC’s consumer reps to ask questions or share any comments.

– Sabrina Corlette, Georgetown Health Policy Institute

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