Proposed HHS Rule Calls For Health Rate-Hike Scrutiny



WASHINGTON—A proposed federal regulation will require health insurers to publicly disclose that they are seeking rate increases of 10 percent or more in the individual and small group markets.

The regulation, unveiled today by the federal Department of Health and Human Services, deals with a core market served by health insurance agents.

Under the proposed regulation, such increases are not presumed to be unreasonable, but will be analyzed to determine whether they are unreasonable.

“This new proposed rate review regulation will also work in conjunction with the medical loss ratio regulation released Nov. 22 to make the health insurance marketplace more transparent and increase the value consumers receive for their health care premium dollars,” HHS said in a statement.

“These two provisions of the Affordable Care Act work together to assure consumers that any increase in their premium is reasonable and that their premium dollars are being spent on their medical care,” the statement said.

Health insurance agents are seeking an exemption from the MLR rules for commissions.

In a letter being sent to members of Congress as part of the effort to win a legislative battle for the exemption, officials of the National Association of Health Underwriters, said that through such legislation, “Congress has the opportunity to preserve and protect consumer and employer access to the indispensable services provided by licensed insurance professionals.”

 The letter added that passing such legislation “would advance the intent of current MLR standards to reduce overall administrative cost spending and maintain an important operational convenience for small businesses and individuals.”

The letter added that, “Congress should ensure consumers have access to regulated professional benefit specialists by removing their compensatory stream of revenue from the MLR calculation.”

Winning such an exemption is a legislative priority for 2011 for the Independent Insurance Agents and Brokers of America and the National Association of Professional Insurance Agents.

In discussing its 2011 priorities, the IIABA said addressing the MLR exemption is one of its “most pressing” issues.

The IIABA said the current MLR regulation and the 1099 reporting mandate scheduled to occur in 2012, “will directly harm small businesses and will lead to job losses and we will be urging Congress to fix these provisions legislatively.”

 Under the rate regulation, whether performed by states or HHS, information about the outcome of all reviews for increases above 10 percent, along with justification provided by insurance companies for those increases determined to be unreasonable, will be posted on the HHS website.

The insurance plan will also have to make its justification for a rate increase available on its own website under the proposed regulation.

Under the rule, after 2011, a state-specific threshold will be set for disclosure of rate increases, using data and trends that better reflect cost trends particular to that State. 

The proposed regulation calls for states with “effective rate review systems” to conduct the reviews.

If a state lacks the resources or authority to do thorough actuarial reviews, HHS would conduct them. 

In a statement, HHS said it will continue to make resources available to states to strengthen their rate review processes.   

HHS said the proposed regulation is designed to help “safeguard consumers from unreasonably high rate increases by providing consumers with detailed information on proposed increases.”

It said that, “disclosing proposed increases, along with the insurer’s justification, would shed light on industry pricing practices that some experts believe have led to unnecessarily high prices.”

According to the HHS fact sheet, “This unprecedented new transparency in the health insurance market will promote competition, encourage insurers to do more to control health care costs and discourage insurers from charging rates which are unjustified.” 

HHS linked the latest proposal as part of a two-pronged plan designed to rein in continued healthcare insurance rate increases.

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