Fi­nal rule irks both in­sur­ers, con­sumer ad­vo­cates

Modern Healthcare - - Front Page - Re­becca Vesely

Fi­nal rule on rate re­views doesn’t please in­sur­ers, con­sumer ad­vo­cates

Afi­nal fed­eral rule re­quir­ing health in­sur­ers to re­veal and ex­plain dou­ble-digit pre­mium rate hikes man­aged to dis­ap­point both the in­surance in­dus­try and con­sumer ad­vo­cates. The reg­u­la­tion HHS re­leased last week un­der the fed­eral health­care re­form law makes health plans un­dergo rate re­views this year when they pro­pose rate in­creases on in­di­vid­ual and small group mar­kets of 10% or more. This trig­ger means states will con­duct a re­view of the rate to see if it’s ex­ces­sive. If states don’t have the ca­pac­ity to con­duct these re­views, HHS will do them.

The re­quire­ment starts Sept. 1, pushed back from an orig­i­nal ef­fec­tive date of July 1 that was in­cluded in the pro­posed rule pub­lished in De­cem­ber 2010. Amer­ica’s Health In­surance Plans, the main lob­by­ing group for in­sur­ers, had re­quested more time to pre­pare. In­sur­ers must also step up their trans­parency ef­forts by giv­ing mem­bers easy-to-un­der­stand in­for­ma­tion about the rea­sons for rate changes, post­ing these ex­pla­na­tions on their web­sites and for­ward­ing them to HHS to also pub­lish on­line.

AHIP had asked HHS to jet­ti­son the 10% in­crease trig­ger, ar­gu­ing that it doesn’t take into ac­count re­gional mar­ket vari­a­tions, med­i­cal cost driv­ers and other fac­tors. Start­ing Sept. 1, 2012, de­ci­sions about what will trig­ger a rate re­view will be de­ter­mined on the state level in co­or­di­na­tion with HHS, ac­cord­ing to the fi­nal rule.

In a state­ment, Karen Ig­nagni, AHIP pres­i­dent and CEO, said the trig­ger is mis­lead­ing. “An ar­bi­trary thresh­old for re­view will es­tab­lish a de facto pre­sump­tion of un­rea­son­able­ness in what should be an ob­jec­tive, ac­tu­ar­i­ally based eval­u­a­tion,” she said.

In the mean­time, some con­sumer ad­vo­cates said the rule does not go far enough to curb ex­ces­sive rate hikes or ad­e­quately in­form the pub­lic about why they hap­pen. “The health re­form law re­lies on pub­lic dis­clo­sure of un­rea­son­able rates to shame in­surance com­pa­nies into charg­ing con­sumers fairer prices, but that’s an empty threat if health in­sur­ers don’t have to ex­plain ev­ery as­sump­tion in the full light of day,” Car­men Bal­ber, Wash­ing­ton di­rec­tor for ad­vo­cacy group Con­sumer Watch­dog, said in a state­ment.

The fi­nal rule does in­clude a re­quire­ment that each state give the pub­lic the op­por­tu­nity to weigh in when a rate re­view is trig­gered.

It’s un­clear in how many states HHS will in­ter­vene in this rate re­view process. The agency has awarded 43 states and the District of Columbia $44 mil­lion to beef up their rate re­view ef­forts, and a to­tal of $250 mil­lion was al­lo­cated for this pur­pose in the re­form law. To­day, just 26 states and the District of Columbia have the au­thor­ity to re­ject rate changes. Eigh­teen states have said they will use the grant money to push for leg­is­la­tion to boost reg­u­la­tors’ au­thor­ity to re­ject rate hikes.

But Ok­la­homa, for one, this month re­turned its $1 mil­lion fed­eral grant to im­prove rate re­view, as part of the new gov­er­nor’s op­po­si­tion to the re­form law.

Steve Larsen, di­rec­tor of HHS’ Cen­ter for Con­sumer In­for­ma­tion and In­surance Over­sight, said on a call with re­porters last week that the agency fully ex­pects “a sig­nif­i­cant ma­jor­ity of states will be con­duct­ing re­views.”

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