May 29, 2015

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In This Issue
Exchanging Ideas
Limited Circumstances
Congress and the Courts
Medicare OEP Restoration Bill Headed for a Markup!
New Rules on Medicaid Managed Care
Calling All Wellness Nerds
HUPAC Round Up
What We’re Reading
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Limited Circumstances

On Wednesday, the Centers for Medicare and Medicaid Services (CMS) issued a bulletin clarifying that, under very limited circumstances, insurers will be able to exclude agent and broker commissions from earned premiums for medical loss ratio (MLR) rebate purposes when a portion of an exchange-based plan premium is paid for with advance premium tax credits. The guidance was issued in response to some insurers treating agent and broker commissions as a pass-through expense and requiring agents to collect fees, rather than as a condition of the policy, in order to reduce their administrative expenses and the likelihood of owing consumers rebates. The guidance noted that in order for insurers to qualify for this exemption they must satisfy all seven of the below requirements:

  1. The law of the state in which the policy is sitused does not deem the agent or broker to be a representative of the issuer, AND
  2. The policyholder is not required to utilize an agent or broker to purchase insurance and may purchase a policy directly from the issuer, AND
  3. The policyholder selects, retains, and contracts with the agent or broker on his or her own accord, AND
  4. The policyholder negotiates and is responsible for the fee or commission separate and apart from premium, AND
  5. The issuer does not include these agent or broker commissions and fees in rate filings submitted to the applicable regulatory agency, AND
  6. The policyholder voluntarily chooses to pass the fee or commission through the issuer and is not required to do so, or the policyholder pays the fees or commission directly to the agent or broker, AND
  7. The policyholder issues the 1099 to the agent or broker, if a 1099 is required.

Due to the extremely limited nature of this guidance, the impact that this will have for brokers is expected to be minimal. It could have a few carriers we can think of scrambling though to adjust their rate filings! NAHU does believe the response from the Administration gives some encouragement that the MLR and broker commissions are on the radar, and we will continue to press for broker commissions to be treated as pass-through expenses. You can help by sending Congress an Operation Shout message asking them to support H.R. 815.

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