On April 13, the Department of Health and Human Services’ Center of Consumer Information and Insurance Oversight (CCIIO) announced that effective May 1, 2012, the federally operated PCIP program would be discontinuing their practice of paying licensed agents and brokers for client referrals made to the program. This decision will not impact state-operated PCIP plan payments to brokers, nor will it impact referral payments on cases placed with PCIP prior to May 1. In addition, effective May 1, PCIP will no longer accept letters from providers as evidence of an individual having a catastrophic medical condition, which is one of the requirements for PCIP participation.

The rationale provided by HHS for these changes is that the program’s rapid increase in enrollment (400% growth over a year, including a 25% increase in the last few months) makes the need for additional outreach efforts unnecessary at this time. Never mind the fact that the program has only enrolled about 56,000 people—far short of the 200,000 enrollee goal projected at the program’s outset in 2010. Perhaps a more important fact to keep in mind with this announcement is that each PCIP participant is expected to average $28,994 in medical costs in 2012, which is more than double the $13k per person initial projections.

In a follow-up written communication to NAHU about this matter, CCIIO Director Steve Larsen wrote “This [PCIP decision] has no connection whatsoever to our view of Exchanges and the important role agents and brokers will play, and should not be viewed as such…Of course, PCIP is a temporary bridge program - Exchanges are a long term change and we fully anticipate the role for agents and brokers to be as we have discussed in the past. We look forward to our work together on both these programs.”

Friday’s announcement to discontinue payment to agents and brokers confirms two important policy points NAHU has been making on the Hill, to HHS and to state policymakers:

1. Agents and brokers are critical to ensuring an insurance program’s success. Agents and brokers did an outstanding job in enrolling people into the government risk pool. These efforts resulted in a 400% enrollment increase. This enrollment increase may have raised concerns at HHS that the PCIP program will run out of funding unless enrollment is slowed.
2. Compensation for agents and brokers should not be determined by the government—especially as we move into the new world of exchanges. As an independent broker in a free market, you can choose which insurance plans best meet the needs of your clients while compensating you fairly. If a government entity controls the compensation for placing business in the exchange, political factors will always intrude. As importantly, carriers possess the expertise and systems to track and appropriately compensate agents and brokers—the government does not have this expertise.

NAHU is very concerned that this decision regarding the PCIP plan will result in consumers most in need of health insurance having less access to this important financial protection, but our biggest concern is for the long-term and the way agents will interact with exchanges. We know that many of you will continue—as you always have—to help consumers find the best health plans available to meet their medical needs. You have amply demonstrated your role in the market and strengthened our arguments about the value of brokers and against the government controlling payments to agents and brokers.

We will remain vigilant on your behalf to ensure that agent participation on a broader level, especially as it relates to exchanges, remains the objective of HHS both now and moving forward.