8/1/2011 Agents and Brokers Play Increased Role in Pre-Existing Condition Insurance Plan

New Referral System Starts August 1 in 23 States and D.C.

Beginning August 1, 2011, licensed insurance agents and brokers can receive a flat fee of $100 for each successful referral of a Pre?Existing Condition Insurance Plan (PCIP) enrollee in the 23 states and the District of Columbia where PCIP is federally ?administered.

Insurance agents and brokers must be licensed with a health care line of authority in the District of Columbia or one of these 23 states: Alabama, Arizona, Delaware, Florida, Georgia, Kentucky, Hawaii, Idaho, Indiana, Louisiana, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia, and Wyoming. Information on how to register and receive referral payments for this program is available at, under the  "Brokers” tab.

In addition, on July 1, HHS made it easier and more affordable for people with a preexisting condition to enroll in PCIP. Eligibility standards were eased in all of the federallyadministered PCIPs, and premiums dropped as much as 40 percent in 18 of those states.

These rate decreases brought PCIP premiums closer to the rates in each state’s individual insurance market. In the six states where PCIP premiums were well?aligned with state premiums, PCIP premiums remained the same.

Also effective July 1, people applying for coverage in the federally ?administered states can provide a letter from a doctor, physician assistant, or nurse practitioner dated within the last 12 months stating they have or had a medical condition, disability or illness. As such, applicants no longer have to wait for an insurance company to send them a denial letter.

Under the Pre ?Existing Condition Insurance Plan, enrollees receive  comprehensivecoverage including primary and specialty care, hospital care, prescription drugs, home health and hospice care, skilled nursing care and preventive health and maternity care. Eligibility is not based on income and enrollees are not charged a higher premium because of their medical condition.

To qualify for the program, an individual must be: a citizen of the United States or reside here legally; have been without health coverage for at least 6 months before applying; and have a pre ?existing condition or have been denied coverage because of a health condition.

For more information on plan benefits and rates, as well as information on how to apply, visit The PCIP Call Center is open Monday through Friday, from 8 a.m. to11 p.m., Eastern Time at 1?866?717?5826 (TTY: 1?866?561?1604).

9/16/2011 - A Message To NAHU Members from NAHU's National Legislative Council Chair

To my fellow legislative leaders,

As you know, our national Legislative Council and NAHU Government Relations department communicates with you often and in many ways with updates and items of importance. You do not typically receive an e-mail from myself as your national Legislative Council Chair, so with this e-mail, please understand the importance of today’s correspondence.

Yesterday, the House Subcommittee on Health in the Energy and Commerce Committee held a hearing to address PPACA and the implementation of that law to date. NAHU was represented directly by our CEO, Janet Trautwein. Her written testimony can be seen here. She also gave oral testimony and comments.

As you know, we have been in hearings many times before. However, yesterday was clearly a significant day for NAHU and the 100,000 brokers and agents we represent. NAHU was mentioned by name by congressional committee members and our positions were addressed with many of the points of emphasis brought forward by congressional representatives that you, as legislative leaders, have been discussing and educating your members of Congress on over the last several months.

Although the hearing was, at times, contentious, I was personally moved to see our work at NAHU on educating both consumers and our congressional representatives is having an impact. We will continue to work with PPACA regulations, or any such law that may exist in the future, to continue to fulfill the vision of NAHU, centered in offering quality private sector choices to all consumers with the assistance of a qualified consumer advocate, the licensed insurance professional. THANK YOU!

On behalf of the national Legislative Council, I would also like to thank our government relations staff for their continued outstanding work, especially the efforts surrounding yesterday’s committee hearing. These hearings take extensive time and energy to have the positive effect we saw yesterday and our staff never delivers anything but the best.

Thank you again to all of you for your grassroots and grass tops efforts across the country. Together we will continue to educate and advocate.

See you at Capitol Conference in January!


Troy Cook
National Legislative Council Chair

9/15/2011 NAHU CEO Janet Trautwein Testified In Front Of The House Energy and Conmerse Subcommittee On Health

      On September 15, 2011, the House Energy and Commerce Subcommittee on Health heard testimony regarding the treatment of Brokers’ commissions in the Medical Loss Ratio (MLR) portion of the Patient Protection and Affordable Care Act (PPACA), as well as the effect the interim final rules on grandfathering will have on the health insurance marketplace (specifically, the MLR Repeal Act of 2011,  HR 2077).

     Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU), urged subcommittee members to find a quick and bipartisan solution to the MLR problem. “The economic outlook for many health insurance agents and brokers across the country continues to be bleak,” she said. "As health insurance companies renew and revise their agent and broker contracts for the upcoming year, it is clear the financial situation for many of these business owners is getting worse.”3

            She continued, “I am here to save agent and broker jobs and preserve individual consumer and employer access to professional health insurance advocates. I am not here to score political points. There are too many American businesses at stake.”4

Trautwein summarized her powerful testimony by stating:

         “Removing agent and broker pass?through commissions from the MLR calculation would restore economic stability for licensed health insurance advisors nationally and it would benefit health insurance consumers and health insurance markets. Exempting the pass?through fees would preserve existing cost?saving practices by the producers in the current health insurance market, furthering the intent of the PPACA MLR provisions to reduce overall spending on administrative costs. At the same time, it would preserve important operational conveniences and consumer protections for small businesses and individuals. Finally, eliminating independent producer commissions from the MLR calculation will go a long way toward providing uniform and needed relief to all health insurance markets – and the consumers who reside within them – during the transitional period as PPACA requirements are fully implemented over the next three years.”5  

      She also said that NAHU supported the passage of HR 1206 as well as the repeal of PPACA and subsequent rules via HR 2077.

See Janet Trautwein's Testimony for the United States House of Representatives Committee on Energy and Commerce Subcommittee on Health Hearing "Cutting the Red Tape: Saving Jobs from PPACA's Harmful Regulations" here: Testimony

9/2011 PCIP Broker Referral Payment Program

FAQs: PCIP Broker Referral Payment Program 

Basic program information

Q: What is the PCIP Broker Referral Payment Program? 

A: The U.S. Department of Health and Human Services, which oversees the Pre-Existing 
Condition Insurance Plan (PCIP), has authorized payments to insurance producers, brokers and agents with a health care line of authority who successfully refer people to PCIP. This step was taken to help reach individuals who are potentially eligible, but who have not yet applied. Some states have used broker payments to successfully increase outreach and knowledge about PCIP.  

Q: Are insurance agents eligible to participate? 

A: Yes. Insurance producers – whether agents or brokers – with a health care line of authority are welcome to register and apply to the PCIP Broker Referral Payment Program. For simplicity, we will use the generic term “brokers” throughout this document. 

Q: Where does the broker program operate? 

A: Brokers can register to participate in these states, which are part of the federally administered PCIP: Alabama, Arizona, Delaware, D.C. (District of Columbia), Florida, Georgia, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia and Wyoming. Other states run their own PCIPs but might also offer broker payments. If you have a broker/agent license in a state that is not listed above, go to, click on Find Your State, then select that state from the map to learn more about how PCIP works for people with a pre-existing condition in that state.  

Q: Who administers the broker program? 

A: GEHA manages the broker application, approval and payment process. GEHA is very familiar with PCIP because it has served as its benefits administrator since the program began in July 2010.  

Q: When is the broker program starting in the federally administered PCIP states? 

A: The broker program has started. Brokers can complete the online registration on and begin submitting online client referral forms as soon as they register. 

Q: How can I participate? 

A: Click the “Brokers” link on to register, free of charge.  


Q: Why do I have to register? 

A: To participate, GEHA must verify that you have a current insurance license with the state insurance board, with a health care line of authority in all states where you submit referrals. The registration process is free. 

Q: What information is requested on the registration form? 

A: On the online registration form, all brokers must provide their name, National Producer Number, state where they are licensed and license number, federal tax ID number or Social Security number, street address, email address, and phone number. 
Q: Why do you need my National Producer Number (NPN)?  

A: GEHA will verify all broker insurance licensures through the National Association of Insurance Commissioners’ National Insurance Producer Registry (NIPR) as part of its efforts to protect against fraud in the broker fee program. Brokers who submit client referral forms will have their licenses verified monthly through their National Producer Number. If you do not have an NPN, you may apply for one at 

Q: What if I have several state licenses? 

A: If you are licensed in more than one federally administered PCIP state, you will need to complete a separate registration for each state for which you plan to refer PCIP enrollments. You must use your National Producer Number with all of the states you register for. There is no charge regardless of how many state licenses you register. 

Q: Do I need a contract with GEHA to provide these referrals? 

A: Yes. To comply with federal regulations, all brokers must have a contractual relationship with GEHA so that you can receive payments. The online application process contains a simple agreement that describes the required terms and conditions. You must accept the terms and conditions to participate in the PCIP Broker Payment Program. 

Q: What other information do I need to submit to register? 

A: Interested brokers have to submit three documents to GEHA to register: 

• Online registration form. 

• W-9 form – A link to this PDF form is available on the main page of your broker account after you complete the online registration. Once this form is completed, you can fax it to GEHA at 816-434-4463 or email it as a PDF attachment to [email protected] Please note that although you can enter data into the PDF form, you cannot save the typed data. You will need to print the completed form before you fax it to us or convert it back to a PDF to email to GEHA. 

• EFT payment form – A link to this online form is available on the main page of your broker account after you complete the online registration. All payments will be made via electronic transfer to a broker’s designated bank account. GEHA will not be able to verify brokers for participation unless all three documents are completed and submitted. 

Q: What happens if I forget to complete part of the registration process? 

A: All registrations are reviewed by the GEHA Broker Communication Specialist to ensure that they are complete before we determine if you are eligible to participate. If you have any questions about the registration process, please call the PCIP Broker Communication Specialist toll-free at 1-877-872-7890 between 9 a.m.-5 p.m., Central time, Monday-Friday. You can also send questions via email to [email protected] 

Q: How do I tell GEHA who I referred? 

A: You must submit an online referral form for each person you enroll. After registering, you can log in to your broker account to record your enrollment referrals and track the status of your payments.  

Q: What is the purpose of the client referral form? 

A: The referral form allows GEHA to match your name and your specific client referrals to protect against any possible fraud or misrepresentations and to ensure proper payments. On the form, you must provide the applicant’s full name, address, date of birth, Social Security number and email address. There is a direct link to this form from the main page of your broker account – just click “Submit a new referral.”

Q: How quickly should I complete the client referral form? 

A: To protect against possible fraud or misrepresentations and to ensure proper payments, brokers are required to submit their client referral forms within 30 days of helping individuals apply for PCIP.


Q: Will I get a broker fee for every person I refer to PCIP? 

A: Not necessarily. You will only receive a fee if the individual you refer meets all the program 
requirements and pays their first premium within the required time period. Once applicants are notified that they qualify for PCIP, they must pay their first month’s premium within 30 days for their coverage to become effective. If the initial payment is not received by the due date, the application is canceled.

Q: How will I get paid? 

A: GEHA will use only electronic payments. The application process requires all brokers to complete an EFT payment form, which is available on the main page of your broker account – just click “Complete my electronic bank account information (EFT)” after you log in. To receive payment, all brokers must also complete and return a W-9 form. You can download this PDF form from the main page of your broker account (just click “Submit my W-9”) on this website, but you must return it to GEHA by fax (816-434-4463) or by email (PCI[email protected]) because this process cannot be completed online. 

Q: How often will I get paid for referrals? 

A: All approved brokers will receive monthly payments by the 30th of each month for referrals received and confirmed the previous month. Payments will only be made through the electronic funds transfer that you authorize during the application process.

Q: How will I know the status of my referrals? 

A: When you log in to your PCIP broker account, click on “View my submitted referrals” to see a list of referrals and the status of processed and pending payments. 

Q: I’ve been referring clients to PCIP over the past few months. Can I be paid for those referrals? 

A: No. Payment will only be made for clients who are “qualified referrals” beginning on August 1, 2011, the effective date of the Broker Referral Payment Program. 

Q: I’m a member of a Field Marketing Organization (FMO). Will my FMO be paid, too? 

A: No. There is no payment mechanism for FMOs – only for individual brokers. 

Q: What if I have questions about payment? 

A: If you have any questions about possible payment for your referrals, please call the PCIP Broker Verification Specialist toll-free at 1-877-872-7890 from 9 a.m.-5 p.m., Central time, Monday-Friday. You can also send questions via email to [email protected] 

Q: Will GEHA report broker referral fees to the IRS? 

A: Yes. GEHA will mail 1099 statements to qualified brokers who receive payments as required by the IRS. You can expect to receive this statement in late January. If it does not arrive for some reason, please contact the PCIP Broker Communication Specialist at 1-877-872-7890 from 9 a.m.-5 p.m., Central time, Monday-Friday. You can also inquire by sending an email to [email protected] 

Fraud Protections

Q: How will GEHA ensure that other brokers are not trying to claim payments for my referrals? 

A: To protect against possible false payment requests, the GEHA Broker Communication Specialist will monitor payments to registered brokers. The Specialist will contact a random sample of applicants each month to verify that the broker submitting the referral directly provided assistance to them. The Specialist may also perform random spot checks or other accountability measures to ensure the integrity of the broker referral system.  

9/29/11 Congressman Tom Rooney - JOBS: The High Cost of Red Tape



The Rooney Report

September 29, 2011

Across the country, the costs of excessive government mandates and red tape are preventing businesses from growing and hiring new workers.  Small businesses – which employ half of the private sector workforce and create 65 percent of new jobs (according to the Small Business Administration) – are hit especially hard.   Here’s what they’re up against:

  • The 2010 Federal Register contains  (Competitive Enterprise Institute).24,914 pages of final rules and regulations
  • Total regulatory costs amount to $1.75 trillion annually (Small Business Administration). 
  • The cost of complying with federal regulations averages $8,086 per employee.  For businesses with fewer than 20 employees, the average cost is $10,585 per employee (Small Business Administration).

No wonder the Office of Management and Budget (OMB) reports that American businesses spent 8.8 billion hours in 2010 filling out regulatory paperwork!  

Most of these regulations are written by the executive branch and are never reviewed or approved by Congress.  Unfortunately, the Obama Administration is adding new mandates, rather than focusing on ending excessive, unnecessary ones.  The Administration has proposed 4,257 new regulations, according to OMB, which estimates that 219 of these new mandates would cost more than $100 million each to implement. OMB estimates that the seven most expensive will cost more than $1 billion apiece, and as much as $100 billion total.

We need to move in a new direction.  This fall and winter, the House of Representatives will review some of the most costly existing and proposed regulations to consider their impact on economic growth and job creation, and we will hold votes to repeal many of these unnecessary mandates.  I will also urge the House to consider the REINS Act (Regulations from the Executive in Need of Scrutiny), which requires Congressional approval for any new rules that would have a significant economic impact. 

By cutting through the red tape and repealing many of the costliest mandates, we can get the federal government off the backs of small businesses, and let them do what they do best – grow and create jobs.

As I review proposals before Congress to cut red tape and create jobs, I would greatly appreciate your thoughts. You can contact me by visiting my website, and please be sure to stay connected by "liking" my Facebook page and following me on Twitter and YouTube.  View the results of last week's survey on President Obama's $1.5 trillion tax increase proposal HERE.


Congressman Tom Rooney

9/2011 Policy Recommendations for Establishing a Health Insurance Exchange

Policy Recommendations for Establishing a Health Insurance Exchange


The establishment of the health insurance exchanges is one of the most significant and far-reaching aspects of the private health insurance reforms containd in the federal Patient Protection and Affordable Care Act (PPACA). Required to be operational by January 1, 2014, exchanges will not be insurers, but will provide qualifi ed individuals and small businesses with access to insurers’ qualifi ed health plans. Exchanges will have additional responsibilities as well, such as certifying plans and identifying individuals eligible for Medicaid and the Children’s Health Insurance Program (CHIP), and administering the premium and cost-sharing credits enacted under PPACA. The exchanges will transform our nation’s private health care marketplace for individuals and small businesses buying coverage.

The National Association of Health Underwriters (NAHU), as the leading professional trade association for health insurance agents, brokers and consultants, represents more than 100,000 benefi t specialists nationally. Our members service the health insurance policies of millions of Americans and work on a daily basis to help individuals and employers purchase, administer and utilize health insurance coverage. Consequently, we have a profound interest in the development of health insurance exchanges and feel that the decisions state and federal policymakers will be making over the next few years regarding their design will be critical. As the individual states and the federal Department of Health and Human Services (DHHS) begin their work establishing health insurance exchanges in the states and creating the regulatory structures to govern them, NAHU is pleased to offer a number of central ideas for successful implementation based on our members’ everyday real-world policy experiences with individuals and businesses of all sizes.


Exchanges Should Be Created and Operated by the Individual States The fi rst decision a state will need to make regarding an exchange is whether or not to establish one at the state level in the fi rst place. PPACA leaves implementation responsibility of exchanges for the small-group and individualmarkets primarily with the states.1 However, exchanges are not optional. If a state fails to take the necessary steps to begin creating exchanges to serve one or both of these markets by January 1, 2013, the legislation requires the Department of Health and Human Services to create and operate exchange options for state residents instead.

NAHU recognizes that some state policymakers may have philosophical, political and or fi nancial objections to PPACA generally, and/or the state-level exchange requirements specifi cally. However, NAHU fi rmly believes that any such objections should not preclude the state from establishing its own exchange. State-based exchanges are the only way for state policymakers to ensure that the unique interests of their constituents are being met. Furthermore, allowing for a federal fallback exchange for state residents and business owners would give the federal government unprecedented control over not only the state’s private insurance market, but also its public health assistance programs like CHIP, Medicaid and associated state-level expenses. The federal government, not the states, would establish enrollment/disenrollment and other plan functions details normally under statecontrol today.

Each state’s population is different, with diverse needs and interests. Creating exchanges at the state level will allow for variations and innovations to accommodate the specifi c needs of state residents. State-level exchanges will also provide residents with customized and timely consumer protections, patient advocacy and more effective customer service than a national exchange operated by federal regulators ever could. State-level exchanges also ensure that state offi cials have complete control over associated spending. PPACA does establish federal start-up grant funding for state-based exchanges, and requires that each exchange must be self-sustaining by January 1, 2015,3 but there will be ongoing administrative costs, which will, in all likelihood, be borne by the state. If the state government retains control over its exchange’s administration and design, it can make responsible choices about what type of exchange infrastructure best suits the state in terms of budget and the needs of its specifi c population.

There are many different structural models for an exchange, some of which are much more costly for a state than others. The two existing state-based exchanges, the Massachusetts Connector and the Utah Portal, bear this out. While the Massachusetts Connector has a staff of 50 employees and an annual budget of $30 million, the Utah Portal is run by two individuals with an overall administrative budget of less than $1 million.

If a state elects not to create its own exchange and instead allows for a federal exchange to serve its residents, it also allows the federal government unprecedented control over state programs and spending. One of the stated functions of an exchange, according to PPACA, is informing individuals about their eligibility for Medicaid, CHIP or any applicable state benefi ts program and enrolling all persons found to be eligible. If a state creates its own exchange, then it retains control over its public health assistance programs, their eligibility rules and enforcement of those eligibility rules. However, if the federal fallback exchange mechanism is utilized, then federal regulators will assume control of determining eligibility and enrolling state residents in public assistance programs. With spending for Medicaid, CHIP and other public health programs such an enormous part of most states’ budgets,4 it is hard to see how ceding unprecedented control over these programs to a federal entity would be fi nancially sensible. Each state’s population is different, withdiverse needs and interests.

NAHU believes that exchanges should alwaysinclude an option for participating individuals and businesses to contact a certifi ed, state-licensed and independent agent/broker for assistance wittheir exchange-based coverage. PPACA specifi - cally establishes that health insurance agents and brokers be allowed to enroll individuals and group plans in exchange-based products and assist with subsidies for eligible individuals.5 Furthermore, independent agents and brokers should continue to be compensated for providing consumers with this service using fair market rates through the health insurance carriers with which they contract to do business. States should also consider offering agents and brokers fi nancial remuneration for bringing individuals eligible for federal public health assistance programs, like Medicaid and CHIP, into the coverage system through the exchange, as has been tried at the state level to improve coverage rates.

Health insurance agents and brokers work on a daily basis to help individuals and employers of all sizes purchase health insurance, use their coverage effectively and make sure they get the most out of the benefi ts they have purchased. They design benefi t plans, explain coordination issues of public and private benefi ts to individuals/ employees, explain how the interplay of existing federal and states law work, and solve problems that may occur once coverage is in place. They also help employers of all sizes ensure compliance with state and federal laws and serve vital human resource functions for millions of American small businesses. They assist with claims and billing issues, which may include interacting with providers to correct coding issues. Their active assistance means that consumers’ needs are addressed quickly, usually without the need to use the formal appeals process. Consumers’ need for help in all of these areas will only increase as health reform is implemented.

Since it is the professional role of our members to provide consumers with accurate information about their health coverage options, exchange participation is a natural fi t. In fact, all successf l state-level private purchasing pools and exchanges have elected to utilize the services of agents and brokers for this reason. Those did not do so initially, like the Health Insurance Plan of California (HIPC), which was the longestrunning state public purchasing pool to date (operational from 1993-2006), quickly found that the active participation of licensed agents and brokers was the key to the pool’s enrollment success. The private market has years of experience in setting up exchange models, and with agents’, brokers’ and carriers’ knowledge, xchanges will be able to minimize start-up costs. Agents and brokers can help an exchange anticipate consumer questions in advance and accelerate the program’s start-up success. In addition, they will serve as a valuable resource to employers that operate in multiple states and may be navigating overlapping and varying exchange rules. Employers with multiple state exposures have issues arranging coverage currently. Their need for professional assistance will only increase with the addition of exchangebased coverage options.

However, to ensure that the advisors participating in the exchange are well-qualifi ed and accountable to state-level consumer protection standards, it should be specifi ed that all individuals and entities selling coverage or providing coverage option advice to consumers through any exchange should be subject to existing state insurance licensure and continuing education requirements, as well as all other applicable state-based regulations.

Agents and brokers who would like to participate in selling and servicing products through the exchange could be further required to complete an annual exambased certifi cation process that addresses both private coverage options and public assistance and subsidy-eligible options to ensure that they are familiar with all coverage choices available to consumers. Trained advisors will help increase access and overall coverage rates by helping individuals determine what options were available and best-suited to their individual needs, and following existing state-based licensure and education requirements will ensure continued accountability and consumer protection.

Allowing for Multiple, Competing Exchanges

In addition to requiring that each state have an exchange to serve its individual and smallgroup markets, PPACA also provides the states with the option of allowing for the creation of multiple exchanges under specifi ed circumstances. When developing an exchange infrastructure,
NAHU believes that each state should strongly consider allowing for privately financed exchanges, as well a public exchange to serve its insurance markets. Private exchanges, which are non-subsidized and offer private-market insured products, are currently operational in several states. These private exchanges offer all the benefi ts of government-sponsored exchanges (plan selection, online enrollment and service, employer list billing, broker assistance, etc.) but do so without government management. Allowing for private exchanges will increase competition and consumer choice in the state, as private options may be able to offer choices to consumers that might be unavailable through a public exchange. These choices could include plan designs that meet PPACA guidelines for acceptable coverage but offer benefi t confi gurations different than the Platinum, Gold, Silver and Bronze plans that will be offered through the public exchanges. products through an exchange could be offered through the public exchanges.
Design and Structure of State-Based Exchanges

In designing a state-based exchange, policymakers will need to make a multitude of structural decisions that will likely determine the exchange’s success. One of the fi rst key decisions a state will need to make is whether or not to create one exchange in the state or two. PPACA requires the establishment of an individual market exchange and also a Small Business Health Options Program exchange (SHOP exchange) to serve the small-employer market. The new law also allows states to operate separate individual and smallgroup exchanges, or to merge the two into a single exchange.9 If a state elects to combine its exchanges, it will also have to decide whether or not to combine the underlying risk pools for each market or to keep those pools distinct. 
To save costs, increase effi ciency and preserve the long-term health of the state’s private insurance markets, NAHU recommends the creation of one public exchange where both individuals and small-business owners can access coverage options, but with separate underlying infrastructures and risk pools. 
From a consumer perspective, having just one exchange makes sense since it will be a single entity for the state to promote and individuals and business owners to access. Also, by combining the public aspects of the exchange for both markets, a state can avoid duplicating many administrative services like website management, risk adjustment and advertising. One staff can serve the exchange for both markets, as can the same governing body. 
However, for the exchange to be successful in the long term, it’s just as important that, on the back end, the state treat the exchange populations for the individual and small-group markets separately. PPACA requires insurers to pool all of their individual members in one risk pool and all of their small-employer group members in another, but the law also gives state exchanges the prerogative to combine risk pools.10 Keeping participation pools distinct within the exchange is important for both the pooling of risk and for the administration of health insurance premium subsidies available to low-income individuals who purchase coverage through the exchange. 
The idea of combining the individual and smallgroup risk pools might seem appealing; some believe it would make the entire exchange risk pool larger, theoretically reducing costs. It can be argued that individual consumers are relatively weak buyers of health coverage, as they are far more likely than a business owner to purchase health insurance coverage only in anticipation of needing to use the benefi t. This type of purchase ing is known as adverse selecti n, which, if left unchecked, can cause price havoc to an insurance pool of risk. So, in theory, individual market consumers need the stability of the largest possible risk pool to mitigate their vulnerability.
However, PPACA already provides mechanisms that should ensure adequately sized risk pool 
for both markets, eliminating the need to combine them. The law includes both the requirement that all Americans must purchase qualified health insurance coverage in 2014, and employer responsibility requirements regarding the purchase of group coverage for those with more
than 50 workers (including part-time employees on a pro-rata basis). Both of these provisions should, at least in theory, exponentially expand the number of people insured and the federal health insurance subsidies will ensure that they can pay for it. Additionally, there is a reqirement in PPACA that carriers must pool all of their individual coverage risks together, regardless of whether the coverage was purchased through the exchange or not (excluding grandfathered plans), and there is a similar requirement for carriers regarding all small-group business.

Not requiring health insurance carriers to mix market types within their underlying exchange
risk pools will also promote greater long-term health insurance market and exchange stability. State laws differ signifi cantly between the group and individual markets, and actuarially these segments are quite different. Employer group health insurance participation expands and
contracts with business growth, whereas the size of individual or families can be more driven by a perception of an immediate need for coverage. Combining the individual and small-group market risk pools would likely cause adverse selection to the small-group pool, which would ultimately be much more costly to the exchange’s participating consumers and health plans, and the insurance marketplace in general. 
In the Massachusetts combination experience (which only encompasses a fraction of the state’s small-group market), combining individuals and small groups did not result in lower premiums. From 2007 to 2008, small-group premiums grew 5.8%, compared with 4.8% for midsize and 5.4% for large groups, according to state fi gures.11 Additionally, the American Acade y of Actuaries cites in a recent issue brief that if a “guaranteed-issue individual market is merged with the existing small-group market, we would expect to see rates in the combined maret to eventually increase overall... In fact, rates may increase very rapidly if employers and individuals realize that they can defer the purchase of insurance until there is a need for care.”

It is also important to note that all health insurance carriers currently keep these two pools of risk entirely distinct. Requiring them to combine these two distinct blocks of business into one underlying risk pool could require significant infrastructure changes that would be both costly and time-consuming to implement and would certainly impact the price of premiums. Furthermore, it might reduce competition because some carriers may not fi nd it profi table to remain in the individual and/or small-group markets.
Keeping the underlying individual and smallgroup exchange infrastructures separate is also
important for effective subsidy administration. PPACA provides for subsidies for a number of different types of exchange purchasers: (1) individuals without access to qualifi ed employer-
sponsored coverage with family incomes between 100 % and 400% of the Federal Poverty Level; (2) low-income individuals whose employer-sponsored coverage fails to meet adequacy and/or affordability tests; and (3) qualifi ed lower-income individuals who wish to opt out of their employer-sponsored coverage and utilize an “employee free choice” voucher to purchase coverage through an exchange. All of these categories of individuals need to purchase coverage through the individual market portion of the exchange; however, subsidies are not available to qualifi ed group coverage benefi ciaries, so keeping the two populations separate from an administrative perspective would be the most feasible course.
Regional Exchanges

As an alternative or supplement to a state-based exchange, PPACA permits states to join together and form regional exchanges. The idea of a regional exchange is appealing to many as a way of reducing state-level expenditures and associated administrative costs. However, NAHU believes it’s also an idea that should be approached with caution. Unless fl awlessly executed, due to variations in state laws and needs, a regional exchange could wind up actually being more costly and diffi cult to administer than separate state-based exchanges. Even contiguous states have very diverse populations and needs. Also, since the business of insurance has always been primarily regulated at the state level, each state insurance market has differing regulations, consumer protections and carrier participation. Resolving those legal differences in a way that is both consumerfriendly and administratively simple could prove to be extremely challenging.
Less is More—Keep the Exchange Structure Simple

Once a state decides it will create an exchange to meet the coverage needs of its individual and small-group market consumers, how the exchange will be structured, staffed and governed are the most important decisions that will need to be made. Generally, NAHU believes that a state-based exchange should strive for the simplest administrative structure possible, utilizing existing state regulatory authorities like the state department of insurance for their governance instead of creating a new “bricks and mortar” entity that will merely duplicate many existing state government functions and services. In addition, we feel that a successful exchange model will utilize the current private health insurance marketplace structure, which provides thousands of jobs in each and every state, with as little disruption as possible. Utilizing these strategies of exchange design will be less costly to the taxpayers and grant consumers a greater degree of satisfaction and consistent protection. 
State-level exchanges are not a new concept. They are merely a new type of health insurance purchasing pool, and the state purchasing pools that have been most successful to date have served as market facilitators and aggregators of premiums for small-business participants rather than risk-bearing entities and regulatory bodies that also sell private coverage. They have also tended toward the portal approach to exchange development, which provides consumers with easier access to coverage options without disrupting the existing private insurance market. State-based online portals are the easiest and most cost-effective way for the exchange to present coverage options and quality information in a standardized format, and could also be utilized as a means of connecting consumers with qualifi ed and trained health insurance agents and brokers to provide them with guidance as well as subsidy enrollment and health insurance purchasing assistance. This function could be structured similarly to the Internet-based home sales portal operated by the National Association of Realtors,, which connects potential homebuyers with a state-licensed property listing agent. is an excellent example of the portal approach to accessing a service that
states might want to investigate. On the site, private companies compete and list homes for sale in one place in a standardized format. But does not regulate the types of properties that can be listed, nor does it regulate the prices that sellers charge consumers. The real estate market is also a good example of how multiple, competing portals or exchanges
can be used to serve consumers, which is allowed under PPACA. While is a nationwide service, it does not preclude individual and regional realty companies like Weichert andColdwell Banker from operating their own portals to assist homebuyers.
Maintain Two Separate Markets and a Level Playing Field between Them—Keep State Requirements the Same Inside and Outside the Exchange

Another key issue that states will need to address is how the rules governing their exchangeswill mesh with existing and varying state coverage rules and consumer protections. In an effort to maintain consumer and employer choices, and to ensure insurance options are available
in the event the exchanges do not prove viable, Congress specifi - cally provided that individual and group health insurance markets are to exist outside of the exchanges. The law also
permits consumers to go outside the exchange, without penalty, if they find less expensive
coverage there. PPACA also provides for “grandfathered” plans to exist outside the exchange.

Despite these protections for health insurance markets to exist independent of the exchange in has come to our attention that some state policymakers see little need for preserving outside individual and small-group health insurance markets. State policymakers could, through the establishment of strict exchange participation requirements and network requirements, effectively eliminate the ability of health insurance carriers to operate in the state independent of an exchange. NAHU feels that any state-based action to limit coverage options outside of the exchange would be a serious mistake that could deprive health insurance consumers of different and potentially more affordable health coverage options. 
Exchanges may prove to be so popular with consumers that they may eventually subsume either the individual health insurance market or small-group market, or both. However, if that happens, it should be a natural market process, not a forced one. Exchanges are a new idea and are bound to encounter some hurdles as they are implemented. It would be imprudent to eliminate consumer choice and an outside marketplace in a time of such great marketplace change. 
To make sure that both the exchange and an independent private market coexist in each state peacefully, requirements for exchange-participating health plans should mirror state laws
for plan options being marketed outside of the exchange; otherwise, adverse selection will be rampant. National experience with purchasing pools of all kinds shows that pools that operate at the state level that also fairly compete with plans outside the pool are the least disruptive to the market. We strongly urge states not to create laws that are less restrictive inside the exchange, as that will merely attract more undesirable risks to the pool and cause short-term damage to the conventional private market. Laws that are more restrictive for exchange participating plans than the outside market will discourage health plan participation within the exchange. It’s critical that the exchange be structured in such a way that it does not damage or eliminate the traditional private insurance marketplace, and the best way to do that is keeping the playing fi eld level. If the exchange totally replaces other private-market options, there may be no other vehicle for coverage if the exchange ultimately fails for any reason.
PPACA establishes that rules regarding the issuance of health insurance coverage and health insurance rating methodologies will be the same for the individual and fully insured small-group markets, regardless if coverage is purchased through the exchange or through the traditional private market. These rules will go a long way toward ensuring even competition in the state. However, several other areas of market regulation may be different for exchange purchasers versus traditional market purchasers unless the state makes efforts to account for these variances.
Mandated insurance benefit requirements could vary significantly between the two marketplaces. PPACA requires that exchange-based plans include coverage of essential benefi ts and, while the framework of what those benefi ts will be are included in the statute, the specifi c details will be determined through a yet-to-be-issued federal regulation. PPACA also acknowledges that all states have their own laws on the books specifying mandatory coverage requirements for both individual and smallgroup plans, and that aspects of these requirements may be more stringent than the federal mandated essential benefi ts. If this is the case, the state is given the option of whether or not to extend its existing mandated benefi t laws to the exchange population. If a state elects to do so, however, it is responsible for bearing the cost of providing these additional mandated benefi ts to people receiving subsidized coverage through the exchange. In other words, no federal subsidy dollars may go to pay for additional state-level mandated benefi ts. Accordingly, each state will need to carefully evaluate its mandat d benefi t requirements. If the state elects not to apply any of its specifi c mandated benefi t requirements to the exchange population but still requires the traditional market to abide by those mandates, it could cause great harm to that market. Premiums in the traditional market would need to be proportionately higher than exchange premiums to account for the costs of the additional mandate benefi ts. Furthermore, individuals and groups who anticipated a need for those specifi c benefi ts would be perversely incented to buy traditional coverage versus the exchange-based products. The resulting adverse selection could cause premiums to spiral and the eventual demise of the traditional market. A better course of action would be toeither adopt the federal standards both inside and outside of the exchange, or apply the mandated benefi t standard evenly across all markets. 
Another concern is product availability and participation requirements both inside and outsidethe exchange. Federal law limits exchange products to Platinum, Gold, Silver and Bronze plan designs. Furthermore, deductibles will be strictly limited, in effect barring high-deductible plans from the exchanges. Given the wide scope of services covered under PPACA’s rules and the benefi t levels mandate for the various plan designs, it’s hard to see how affordability will be maintained for individual market consumers. Effort should be made to offer, within the existing guidelines, affordable choices for those consumers who wish to bear reasonable risk inproviding for their health security. In the absence of such options, a state may fi nd that only those individuals eligible for subsidized coverage may elect to participate in the exchanges. 
However, on the employer side, if the state is not careful regarding participation requirements for employer groups, there may be an uneven attraction of employer groups to the exchange-based marketplace. Currently, in the small-group market, many states and virtually all health insurance carriers require some degree of minimum employee participation in order to offer a group health insurance plan. These requirements are what prohibit many smaller employers from offering multiple benefi t options to their employees, particularly from multiple insurance carriers. However, unless the state makes provisions otherwise, an exchange may allow multiple carriers to offer multiple products to the employees of a single employer—a feat that may not be able to be duplicated outside of the exchange unless the state addresses particpation requirements.
A final aspect of the law that may create an unlevel playing fi eld is the availability of subsides for individual market purchasers. PPACA provides that the low-income tax credits for individual market purchasers are only available to those purchasing coverage inside the exchange, thereby strongly incenting such purchasers to buy an exchange-based coverage product. To discourage adverse selection in this manner against the exchange pool, we recommend that the state explore options that would also allow individual who elect to buy coverage in the traditional market to also be eligible for a subsidy, either through a waiver or a state-funded effort. The Massachusetts Connector provides for the use of subsidy dollars in both the traditional private and exchange-based markets for this very reason. 
Focus on the Small Groups—Participation in the Exchange 
Another variable PPACA forces state-based exchanges to address is he size of the employer- sponsored health insurance plans that will be allowed to purchase coverage through an exchange. And there are multiple decisions a state will have to make in this regard. Before 2016, states will have the option to define “small employers” either as those with (1) 100 or fewer employees, or (2) 50 or fewer employees. Beginning in 2016, small employers will be defi ned as those with 100 or fewer employees in all states. A state’s decision on this issue will be highly individualized and based in large part on how these markets are functioning currently, and states are likely to come to different decisions based on their specifi c situations. 
A “large employer” will be an employer that had an average of at least 101 employees the preceding calendar year and at least one employee on the fi rst day of the plan year. Initially, these employers will not be eligible to participate in the exchange, although PPACA allows the state the option of expanding the exchange to serve as a potential coverage option for larger groups beginning January 1, 2017.17 NAHU recommends against states allowing larger employer groups to utilize the exchange as a purchasing mechanism. Current state-based exchange models in Utah and Massachusetts are only providing coverage options to the small-employer market; while both exchanges 

10/24/11 Medicare Marketing Reminders and Expectations for Medicare Advantage & Medicare Prescription Drug Plans for 2011/2012

Marketing of the 2012 Medicare Advantage and Medicare Prescription Drug plans has already started, and starting this year, open enrollment begins and ends earlier, October 15- December 7, 2011. During this time, members can change their Medicare health Plan or prescription drug coverage for 2012.  The following reminders will help ensure agents/brokers have a safe and compliant marketing environment.

  • Proactively take measures to protect Medicare members by ensuring that members are not misled. Special attention should be focused on vulnerable members and beneficiaries impacted by plan non-renewals.
  • Ensure your organization does not employ any type of pressure tactic that requires Medicare beneficiaries to provide their contact or personal information at marketing sales events or when they are calling for general information.
  • Ensure your organization provides clear and accurate information related to your product’s drug benefit, including information related to costs, plan formularies, and the coverage gap.
  • Appointments that are scheduled with a beneficiary, regardless of the intent, are considered sales appointments and must comply with the requirements specified in section 70.9 of the Medicare Marketing Guidelines regarding individual appointments.  You may provide educational content in addition to plan specific information during an individual appointment.
  • Other than the CMS Online Enrollment Center, the only online enrollment mechanism that you may make available is via the plan sponsor’s website.

If you have questions, you are advised to contact the plan with which you work.  Below are helpful Medicare links.

Final 2012 Medicare Marketing Guidelines may be viewed at

Guidance for MA plans under Part C and PDPs under Part D plans may be viewed at

The final rule implementing MIPPA marketing requirements (Final Marketing Provisions 4131-F) may be viewed at

Fact Sheets with more information on each rule may be viewed at

11/28/2011 - NAIC Approves Resolution Calling for an MLR Fix for Brokers

November 28, 2011


NAIC Approves Resolution Calling for an MLR Fix for Brokers

The National Association of Insurance Commissioners (NAIC) approved a resolution on November 22 calling on Congress and the Department of Health and Human Services to use their respective authorities to preserve consumer access to insurance agents and brokers by adjusting the Patient Protection and Affordable Care Act medical loss ratio requirements to accommodate agents and broker compensation. Following the vote, NAIC President and Iowa Insurance Commissioner Susan Voss released a statement and NAHU issued a press release

The resolution was approved by a vote of 26-20-5 during a teleconference meeting of the NAIC’s Plenary Committee, which consists of the insurance commissioners from all 50 states, the District of Columbia and the U.S. territories. The conference call lasted more than 90 minutes and was, at times, quite contentious, with several moves by various dissenting commissioners to modify the resolution and delay the effort. However, the supporters of the measure stood firm and voted to oppose both a proposed amendment to substantially weaken the resolution and a call to send the matter back to the NAIC’s Executive Committee for further study. 

The vocal proponents -- who included the resolution’s original author, Florida Insurance Commissioner  and NAIC President-Elect Kevin McCarty, North Carolina Insurance Commissioner Wayne Goodwin, who made the motion for consideration of the resolution, Louisiana Insurance Commissioner and NAIC Vice President Jim Donelon and Georgia Insurance Commission Ralph Hudgens, who ultimately moved for the vote on the resolution -- cited  the more than a year of debate on this issue and the urgency of MLR relief for both health insurance agents and brokers and health insurance consumers nationwide as reasons why immediate NAIC action was imperative. 

The role call vote of commissioners to approve the resolution was as follows:

Voting to approve: Alabama, Alaska, Arkansas, Delaware, Florida, Georgia, Idaho, Indiana, Kentucky, Louisiana, Michigan, Mississippi, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah, Wyoming and American Samoan Islands.

Opposed: Arizona, California, Colorado, Connecticut, District of Columbia, Hawaii, Illinois, Kansas, Maryland, Massachusetts, Minnesota, Missouri, New York, Oregon, Rhode Island, Vermont, Washington, West Virginia, the Northern Mariana Islands and Puerto Rico. 

Abstentions: Maine, Montana, South Dakota, Texas and Virginia.

Not present or not voting were Iowa (for procedural reasons), Guam, New Mexico, the U.S. Virgin Islands and Wisconsin. 

NAHU is profoundly grateful for the NAIC’s support of agents, brokers and health insurance consumers that comes with the adoption of this resolution. We strongly encourage all members to thank their insurance commissioners who voted to stand with the agent and broker community on this issue.

Now that the vote is finished, many members have asked what it means for association’s ongoing work to fix the MLR requirements. The resolution is merely a policy statement from the NAIC, so it will have no immediate impact. However, PPACA established a role for the NAIC with regard to the development of the MLR requirements and has accept virtually all of its counsel on both MLR specifically and PPACA generally to date. As HHS works to develop the final MLR requirements, this resolution will hopefully serve as the additional push needed to spur the Department to fix this problem through regulatory channels. 

In addition, the measure is expected to give additional interest and credibility to H.R. 1206, the bipartisan legislation to remove agent and broker compensation from the MLR calculation. The House Small Business Committee plans to hold a hearing on the impact of the MLR requirements on American health care consumers next month, and we expect that the NAIC resolution will factor into that hearing. H.R. 1206 currently has 138 bipartisan cosponsors, and more are always appreciated. Please encourage your representative to sign onto this measure today.