Broker Payment Transparency Rule May Trigger Policy Changes

by Leslie Small

 

The Biden administration recently proposed a regulation that would increase transparency about how brokers are compensated for selling certain health plans.

Background:

• The broker compensation provisions appear in a notice of proposed rulemaking (NPRM) issued jointly by HHS, the Labor and Treasury departments and the Office of Personnel Management. The NPRM proposes to require issuers offering individual health insurance coverage or short-term, limited duration insurance (STLDI) to "disclose to policyholders, before finalizing plan selection as well as on documentation confirming the individual's enrollment, commission rates and compensation structure for other direct and indirect compensation provided by the issuer to an agent or broker associated with enrolling those individuals."
• Previously, the House Energy and Commerce Committee found in an investigation that brokers received commissions that were up to 10 times higher for selling STLDI than commissions for the Affordable Care Act (ACA) plans. That compensation disparity is unsurprising, since STLDI is far more profitable than traditional insurance coverage, health care attorney and research professor Katie Keith wrote in a Health Affairs blog post. And that's because such STLDI plans are not required to spend a certain portion of their premium revenue on medical care, as ACA-compliant plans are.

Will the rule make any difference?

• Sabrina Corlette, a research professor at the Georgetown University Health Policy Institute's Center on Health Insurance Reforms, says she isn't convinced that giving consumers data about broker compensation will be all that helpful.
• "As far as getting a piece of paper when you're about to sign up for a plan saying, 'The broker commission was 3%,' to me, as a consumer, is 3% too high, is it too low?" Corlette remarks. "What would be more informative is to say, 'Your broker is getting 2% for an ACA plan but 10% for a health care sharing ministry'" or another non-ACA-compliant plan.
• Corlette sees more utility in the fact that HHS will now be collecting data on broker compensation for individual market plans and STLDI. "To the extent that data could be shared with state regulators and regulators within CCIIO [CMS's Center for Consumer Information and Insurance Oversight], I think that could actually be really useful information to inform future policy," says Corlette.

From Health Plan Weekly