Amp­ing up over­sight

HHS an­nounces state grants for health plan rate re­view as in­sur­ers seek de­lay

Modern Healthcare - - The Week In Healthcare - Re­becca Vesely and Jessica Zig­mond

The fed­eral gov­ern­ment is push­ing states to ramp up their over­sight of health in­sur­ers, even as health plans ex­press dis­plea­sure with pro­posed rules on pre­mium rate changes. Last week, HHS an­nounced nearly $200 mil­lion in grants over five years avail­able to states to en­hance their pre­mium rate re­view pro­cesses.

The fund­ing, al­lo­cated in the fed­eral health re­form law, aims to help states gain bet­ter over­sight of health plan rate changes af­fect­ing res­i­dents.

“We know that rate re­view is an ex­tremely ef­fec­tive tool to help con­sumers,” said Steve Larsen, deputy ad­min­is­tra­tor and di­rec­tor of the CMS’ Cen­ter for Con­sumer In­for­ma­tion and In­surance Over­sight, on a call with re­porters.

There are four grant cat­e­gories for the new fund­ing. The first grants are three-year “base­line” grants of $3 mil­lion each. Ap­pli­ca­tions are due Aug. 15. The sec­ond grants are twoyear base­line grants of $2 mil­lion, with ap­pli­ca­tions due in 2012.

States can also get added fund­ing in two ar­eas: “work­load grants” to­tal­ing $22.5 mil­lion to states with large pop­u­la­tions and mul­ti­ple in­sur­ers, and “per­for­mance in­cen­tives” to­tal­ing $27.5 mil­lion to states that have the statu­tory au­thor­ity to ap­prove or re­ject in­surance rate in­creases.

The per­for­mance in­cen­tives aim to re­ward states that al­ready have broad au­thor­ity to re­view and re­ject rate in­creases and prod other states to con­sider new leg­is­la­tion that would grant in­surance reg­u­la­tors this au­thor­ity.

Michael Miller, pol­icy di­rec­tor of Con­sumer Cat­a­lyst, a con­sumer ad­vo­cacy group, said the grants will help states “to bring up the rigor of their rate re­view process,” es­pe­cially at a time when many states are ex­pe­ri­enc­ing bud­get short­ages.

“Con­sumers have been the vic­tims of rate shock,” Miller said. “We’ve al­ready seen the im­pact of rate re­view on hold­ing down in­creases in some states.”

Some 43 states have some sort of rate re­view in place, but few states have the au­thor­ity to re­ject health in­surance rate in­creases out­right.

Last Au­gust, HHS is­sued $46 mil­lion to 45 states and the District of Columbia to be­gin im­prov­ing their rate re­view pro­cesses.

While the Pa­tient Pro­tec­tion and Affordable Care Act does not give HHS or states the power to re­ject rate in­creases, it does pro­vide for rate re­view over­sight. In De­cem­ber, HHS is­sued pro­posed reg­u­la­tions on this is­sue (Jan. 3, p. 6).

The new over­sight au­thor­ity means that start­ing July 1, rate in­creases 10% or higher will au­to­mat­i­cally be sub­ject to ac­tu­ar­ial scrutiny. In­sur­ers must jus­tify and dis­close these dou­ble-digit rate in­creases, and if states don’t have the man­power or abil­ity to thor­oughly an­a­lyze the rate hikes, HHS will con­duct the re­view.

Start­ing in 2012, the trig­ger for a rate re­view will vary by state.

In­sur­ers, in a 13-page pub­lic com­ment letter to HHS last week, asked to de­lay the July 1 dead­line when rate re­view is slated to be­gin by one year. Amer­ica’s Health In­surance Plans, the main lob­by­ing group for health in­sur­ers, also ob­jected to the 10% rate hike trig­ger, say­ing in writ­ten com­ments that it fails to ac­count for geo­graphic vari­a­tions as well as the ad­verse se­lec­tion of pa­tients on the in­di­vid­ual in­surance mar­ket and med­i­cal in­fla­tion, among other fac­tors.

The Amer­i­can Hos­pi­tal As­so­ci­a­tion, in its com­ments on the pro­posed rule filed last week, praised HHS for the reg­u­la­tions, say­ing they will of­fer greater trans­parency in how plans can be held ac­count­able pub­licly while also es­tab­lish­ing a fed­eral-state col­lab­o­ra­tion.

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