A Minnesota insurance regulator has given colleagues ideas about how they might answer federal agencies’ questions about health insurance rate review oversight.

Julia Philips, an actuary with the Minnesota Department of Commerce, has posted a preliminary draft about the topic on the website of the Accident and Health Working Group of the National Association of Insurance Commissioners, Kansas City, Mo.

The Internal Revenue Service, the Employee Benefits Security Administration and the Centers for Medicare and Medicaid Services recently issued a request for outside parties to supply the information they need to implement the health insurance rate review provisions included in the new federal Patient Protection and Affordable Care Act.

Philips is the head of an NAIC team that is trying to provide an NAIC response to the request for information.

Federal officials ask, for example, about the level of aggregation typically used for rate filings, and the pros and cons associated with broader and narrower types of aggregation.

Federal officials write that they could look at rates at the policy form level, rates for each plan type, rates by line of business, or average rates at the company level.

In practice, the type of aggregation used “depends on state requirements,” Philips writes. “Companies provide less aggregation.”

Using too little aggregation can lead to problems such as unfair rate discrimination and rate spirals, and using too much aggregation can lead to “high lapses for insureds who are paying more than their expected costs,” Philips writes.

Federal officials also ask about rate review considerations for different types of plans, such as health maintenance organization plans and high-deductible plans.

“HMOs are sometimes regulated by a separate agency,” and they “have different ways of paying claims,” Philips writes.

In some states, nonprofit plans or Blue Cross plans may different rights and responsibilities than other types of plans have, Philips writes.

Philips says she hopes to have the NAIC give federal regulators a detailed description of each state’s rate review methods and help with defining the terms to be used in any rate review program.

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