A white paper from the National Association of Insurance Commissioners affirms the need for a key role for producers in the coming state health insurance exchanges and the appropriateness of compensating them in several ways for their services.
The white paper, “The Comparative Roles of Navigators and Producers in an Exchange: What are the Issues?”, is intended to help state officials identify and resolve the major issues concerning the roles of navigators and producers in state exchanges under the Patient Protection and Affordable Care Act.
A subgroup of NAIC’s Health Insurance and Managed Care Committee tasked with analyzing PPACA’s state exchanges released the eight-page draft report on May 19. It’s expected that the full committee will consider approving the draft in June.
Producers are “crucial players in the success or failure” of the exchanges, the report states, and determining their role is “a vital part of the implementation process” for an exchange. “Producers have a significant relationship of trust with the individuals covered by both the individual market and the small employer insurance market,” the report notes. In addition, it states, producers can increase public awareness of exchanges and drive consumer traffic to an exchange’s website.
The report also acknowledges that including a role for producers will also save the states money: “An exchange that uses the already established system of producers to market, advertise and assist with the exchanges can save on costly overhead and administrative expenses.”
The report tackles 11 questions ranging from licensing requirements to how navigators might assist in enrollment. Nine of the questions address navigator-specific issues, and two pertain specifically to producers.
The first producer-specific item explores questions regarding compensation, starting with acknowledging PPACA’s role in constraining commission revenue and accelerating the move toward fee-based compensation. Noting that many states prohibit producers from charging fees for service in certain circumstances, the report suggests that states should consider a remedy in the form of new legislation allowing “new compensation schemes,” including allowing producers to charge for placing business in a exchange. As an alternative, state officials could consider allowing producers who are not receiving commissions to serve as navigators, the report suggests.
The report also raises the issue of an ongoing role for producers in the small-employer market — without suggesting an answer, however. “Producers form a working relationship with client employers groups, with the employer often utilizing the producer as an expert,” the report notes. If a producer’s small group sends its employees to an exchange, “how can the producer continue to assist the employer?”, the report asks. “In this instance, the producer (as opposed to a navigator) may be the individual with the best relationship and ties to these individuals.”
The second producer-specific item addresses conflicts of interest that could arise for producers who choose to function as navigators. Without offering answers, the report outlines three potential conflicts when a producer is acting as a navigator:
1) If a producer receives commissions on unrelated blocks of business
2) If a producer receives commissions with regard to large groups products that cannot be offered through an exchange
3) If a producer receives trailer commissions from an insurer
The report also recommends that state officials consider whether a producer who works solely in the self-funded market wishes to act as a navigator will face conflicts of interest.
The report also left numerous issues specific to navigators for individual states to resolve on their own, including certification, licensure and errors and omissions coverage.
Look for additional coverage of the NAIC report, including reactions to it, in an upcoming issue of inBrief.
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