On December 7, 2012 the U.S. Department of Health and Human Services (HHS) released a proposed rule that advises States to consider broker compensation as a parameter when issuing Quality Health Plan (QHP) certifications to health plans that are keen to market their health products at the Federally Facilitated Exchanges (FFEs) and Federally Facilitated-SHOP Exchanges (FF-SHOPs). The Government believes that the proposed rule would help synchronize and regulate the State’s local Exchange and non-Exchange insurance markets.
The rule proposes that a QHP certification, granted by a FFE and/or a FF–SHOP, should be issued to health plans on the condition that they pay equivalent broker compensation for QHPs sold through the federal exchanges and similar plans offered outside the exchange markets. While this may appear to be another restraining federal mandate, the ruling may really prove to be a blessing in disguise!
In December 2011, the HHS had released its final rule on Medical Loss Ratio (MLR) that prohibited insurers from counting brokerage fees as administrative costs. In a May 2012 survey, the National Association of Insurance and Financial Advisors (NAIFA) noted that the implementation of the MLR ruling had a devastating impact on brokers’ and agents’ customer service and commission rates.
Last month’s broker compensation ruling may have arrived for the rescue, offering a little treat to various industry stakeholders.
The State Advantage
The December 2011 MLR ruling drove several brokers out of the individual and group insurance markets; but if the latest proposed rule gets approved, it may help stabilize—if not revive— the brokers’ and agents’ positions in both the exchange and non-exchange markets. This may also prove to be a welcome development for brokers’ in states that would have a federally run or state-federal partnership exchange.
The ACA mandates that States set up a navigator system to help in educating consumers about the exchanges and assisting consumers in exchange enrollment and eligibility determination. Brokers and agents boast of mature and well-developed client networks often covering far away, remote regions that can unquestionably help the exchange administrators inform and educate citizens living in rural areas.
The Broker Advantage
The exchanges, both public and private, would open up a plethora of opportunities for brokers. Broker Software New York and other states , which often serve as intermediaries between consumers and insurers, would benefit from associating with the state or federal exchanges or an insurers’ private exchange as these exchanges would have access to a multi-million customer pool. If similar broker compensations are offered in both the exchange and outside exchange markets, business opportunities would be significantly expanded for brokers.
The Insurer Advantage
In unfamiliar and new exchange markets, insurers would require brokers’ and agents’ assistance in various outreach and product implementation efforts to ensure timely and adequate compliance with the multifarious ACA mandates. Exchange enrollees would anticipate guidance and assistance in enrolling in plans, switching plans, understanding the benefits and subsidies that ACA offers among other things; lacking which, most consumers may be unable to purchase a health plan of their choice. As part of the navigator groups, brokers and agents can offer impressive value-additions to insurers’ businesses.
While the motion to standardize broker compensation in the exchange and outside markets may seem inappreciable, in comparison to some of the other important developments occurring in the health reform implementation, this proposal, if approved, is expected to play a significant role in standardizing healthcare across the U.S. insurance markets and infusing new life in brokers’ services.