Insurance agent and broker groups criticized an interim final rule issued Monday that would include agent and broker commissions in calculating an insurer’s medical loss ratio under the new health care reform law.
The interim final rule by the Department of Health and Human Services implements the reform law’s medical loss ratio rules that require insurers underwriting individual and small-group coverage to spend at least 80% of their premium revenues on medical care, while insurers providing coverage to large groups must spend at least 85% on medical care.
The final interim rule does not provide a producer commission carve-out as sought by producer groups. Agents and brokers had sought to exclude their commissions from calculating insurers’ medical loss ratios.
The Washington-based Council of Insurance Agents & Brokers faulted the interim final rules.
Paperless Comment: our opinion is simple and straightforward. Agents’ commissions should not be included in medical loss ratios. Look at it more like advertisement expenses, or office expenses, or marketing budget.