HHS proposes to work with states on insurance rate reviews
The Department of Health and Human Services has proposed new rules aimed at delivering new transparency and scrutiny to health insurance rate increases. Under the proposed rules the HHS will work with states to require health insurers to provide information for "unreasonable" rate hikes.
"Year after year, insurance company profits soar, while Americans pay more for less healthcare coverage," said HHS Secretary Kathleen Sebelius in announcing the proposed rules. "The Affordable Care Act is bringing unprecedented transparency and oversight to insurance premiums to help rein in the kind of excessive and unreasonable rate increases that have made insurance unaffordable for so many families."
The announcement is the latest effort by the HHS to help states handle insurance rate reviews and rate increase requests from insurance companies. In late summer it granted states $46 million to boost oversight for the rate review process.
Currently, 26 states have the ability to reject proposed rate increases, but with thin budgets many lack the resources to conduct stringent and meaningful reviews.
According to the HHS, the proposed rules will require insurers in all states to publicly justify any unreasonable rate increase starting in 2011. But the definition of "unreasonable," at least for 2011, is unclear. The proposed rules state that "proposed rate increases of 10 percent or higher will be publicly disclosed and thoroughly reviewed to determine if the rate increase is unreasonable."
A number of states this year have turned down insurance company requests for rate increases, most of which topped 20 percent. The most recent insurance company setback came this month in Connecticut, where Anthem Blue Cross and Blue Shield has been locked in a contentious battle to raise its rates – a battle that in early November caused Insurance Commissioner Thomas Sullivan to step down.
America's Health Insurance Plans President Karen Ignagni told the Hartford Courant after the increase was denied that the denial was based on politics and not a technical process review.
"Data-driven analysis, actuarial review, would take you to a very different conclusion than the one reached in Connecticut," she said.
The HHS' proposed rules are apparently aimed at allowing the federal government to provide the resources required for a thorough review by any state for rate increases exceeding 10 percent. This would be an attempt to counter the contention from AHIP that rate increase denials are knee-jerk political reactions that aren't based on actuarial analysis.
Under the proposed regulation, states with effective rate review systems would conduct the reviews. If a state lacks the resources or authority to do thorough actuarial reviews, the HHS would conduct them. Meanwhile, the HHS will continue to make resources available to states to strengthen their rate review processes.
While 2011 rate increase request will be handled on a case-by-case basis, after 2011 state-specific thresholds would be set using data and trends that better reflect cost trends particular to each state. Insurance company justifications for unreasonable increases will be posted on HealthCare.gov and the insurance plan's website.
"The proposed rate review policy will empower consumers, promote competition, encourage insurers to do more to control healthcare costs and discourage insurers from charging premiums which are unjustified," said Jay Angoff, director of the HHS' Office of Consumer Information and Insurance Oversight.
