|
 |
 |
|
Federal government to review rate increases in 10 states
Federal regulators will review health insurance rate increases in 10 states under authority granted by the healthcare reform law, according to the Medicare agency's Center for Consumer Information and Insurance Oversight (CCIIO).
Democrats' healthcare reform law requires that health plans in the individual and small-group markets explain rate hikes of more than 10 percent starting Sept. 1. As of July 1, 10 states had failed to adopt effective rate-review mechanisms, paving the way for federal regulators to take over until they're ready.
According to a recent update to CCIIO's website, seven states lack proper resources or authority in both the individual and small-group markets, while another three — Iowa, Pennsylvania and Virginia — will review their individual market rates while federal regulators review the small-group market. The update was first reported by Politico.
The rate review regulation requires independent experts to examine 12 factors to determine whether an increase of more than 10 percent is "reasonable":
• Changes in medical cost trend changes;
• Changes in utilization of services;
• Cost-sharing changes;
• Changes in benefits;
• Changes in enrollee risk profile;
• Impact on rates of over- or under-estimate of medical trends in previous years;
• Reserve needs;
• Administrative costs related to programs that improve healthcare quality;
• Other administrative costs;
• Applicable taxes and licensing or regulatory fees;
• Medical loss ratio; and
• The health plan's risk-based capital status relative to national standards.
The law doesn't give federal regulators the power to reject rate increases deemed unreasonable. However, health plans will be required to publicly justify and post on their websites any "unreasonable" rate increase.
"These steps allow consumers to know why they are paying higher rates," according to CCIIO.
