WASHINGTON-The state of Florida continues to carry the banner of agents on the medical loss ratio issue, asking federal health regulators to review its decision not to exempt Florida from the rule.
In a Dec. 30 letter to the U.S. Department of Health and Human Services, Florida's Office of Insurance Regulation says the provision of the healthcare insurance reform law limiting administrative costs to 20 percent of premiums is harming the state's 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 healthcare law, the Patient Protection and Affordable Care Act.

Kevin McCarty, Florida's insurance commissioner who is now the president of the National Association of Insurance Commissioners, 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.

Industry analysts and lawyers assert that HHS is correct in saying it doesn't have the legal authority to exempt agents from the MLR.

In the letter, McCarty says, "Failure to obtain the requested adjustment will cause permanent, irreparable harm to our market and the distribution channel for health products and services."
McCarty says the HHS has been dismissive of insurers' testimony and announcements that companies would leave the individual market. In fact, significant damage has already occurred.
"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's letter says.  McCarty outlined the severe impact on the agent community as a result of the HHS decision to deny the exemption. He cites an "informal survey" to show harm to agents as a result of cuts in agent commissions, and says the OIR intends to send notarized letters that clearly document the MLR's impact on the agent community by Jan. 6.

The OIR 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 healthcare 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.

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The Florida Association of Health Underwriters and its members would like to thank Commissioner McCarty for his continued support on this issue on behalf of Florida insurance .