The letter also cites the effect of the new MLR ratios on the agent and broker workforce. According to an informal survey, agents have already faced reduced commissions, layoffs, and reduced compensations.
CMS has not issued a timeline for reaching a decision on the appeal. It took CMS about two weeks to recently deny Louisiana's appeal request.
Meanwhile, Kansas and Oklahoma officials learned on Wednesday that their waiver requests have been denied. Kansas asked for MLR adjustments of 70%, 73% and 75% for 2011, 2012, and 2013, respectively. Oklahoma wanted its MLR requirement set at 65% in 2011, 70% in 2012 and 75% in 2013.
CMS made similar findings in both appeals, noting that because no issuers are likely to withdraw from the either state's individual market it was unlikely that the MLR requirement would destabilize the market.
The agency also noted that issuers in the Kansas and Oklahoma individual markets either already meet the 80% MLR standard, or are 'adapting their business models in order to continue to achieve sustainable financial performance in that market, as well as to comply with, and benefit from, the provisions of the Affordable Care Act.'
John Doak, the Oklahoma insurance commissioner, released a lengthy statement criticizing the MLR waiver decision, asserting that it could lead to a 'massive disruption' of Oklahoma's insurance market. 'MLR is an arbitrary and superficial means of judging the worth of an insurance company to its policyholders,' Doak said.
'Just because one company is able to attribute a smaller percentage of its operating costs to each policyholder does not necessarily mean its policyholders received a greater value for their dollar.'
According to the release, Doak supports efforts to repeal PPACA. 'We look forward to the coming months as the Supreme Court will hear challenges filed against this law, and I look forward the eventual, total repeal of the Act.'