NAIC: States need more details on 'effective' rate reviews

Federal regulators will need to flesh out more details on how states should set up acceptable processes to review unreasonable health insurance premium hikes, a National Association of Insurance Commissioners (NAIC) official said Tuesday.

The Health and Human Services Department released proposed regulations Tuesday morning requiring health insurers to justify double-digit rate increases. States will conduct the review process, though HHS will intervene if it determines the state does not have an “effective” review process in place.

The proposed rule describes four criteria for an effective review process, but NAIC past president Sandy Praeger said the organization will work with HHS to develop clearer guidance.

“We’ll know at some point in the future,” said Praeger, who is now insurance commissioner of Kansas. “There may be some additional guidance from HHS about what they want states to be doing, and I think that’s an ongoing process.”

HHS officials stressed Tuesday morning that they want states to handle rate reviews. The healthcare reform law, which required the reviews, will provide $250 million to help states bolster insurance rate oversight.

Praeger said that states lacking effective rate reviews will work quickly over the next few years to improve their systems.

“It’s the lesser of two evils,” she said. “They’d rather file with the state regulator than have to go to HHS.”

The HHS proposal requires "unreasonable" rate reviews for insurers in the small-group or individual market, but Praeger did not rule out that the large-group market will be included in the future

“The real issue is the individual or small-group market,” she said. “That’s where you have more rate volatility.”