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PPACA: NAIC Postpones Decision on Rate Form

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A proposed health insurance price change disclosure form will be going back to the drafters.

The Health Insurance and Managed Care Committee at the National Association of Insurance Commissioners, Kansas City, Mo., has decided to defer action on the form, which was developed by the Speed to Market Task Force.

The task force created the form draft to implement rate review provisions of the Affordable Care Act (ACA), the legislative package that includes the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act.

The ACA rate review provisions require the NAIC and state insurance regulators to use the tools at their disposal to get health carriers to notify them about pending rate changes and to justify any changes that appear to be “unreasonable.”

The Health Insurance and Managed Care Committee has posted a number of comments on the rate filing disclosure form draft, and the committee has asked the task force to “consider revising the forms, as appropriate, in light of the comments,” officials say.


Candy Gallagher, a vice president at America’s Health Insurance Plans, Washington, has written to the NAIC to suggest that the ambiguity of the term “unreasonable” will cause problems.

“We understand that [the U.S. Department of Health and Human Services] will be responsible for developing a definition,” Gallagher says. “However, absent clear definitions at this time, it is difficult to be sure that this form addresses that ‘test.’”

AHIP also would like to see the NAIC develop separate forms for the individual and small group markets, and to exempt large group plans from the rate change disclosure process, or at least give large groups the ability to protect the confidentiality of their information, Gallagher says.


Joan Gardner, executive director of state services at the Blue Cross and Blue Shield Association, Chicago, also is asking the NAIC to keep large group coverage out of the rate disclosure process.

“The large group market usually is rated based on: (1) the particular employer’s experience, or (2) a blend of the particular employer’s experience with that of the overall pool,” Gardner says. “This means that the rate increase is unique for each employer and a disclosure form potentially would be needed for each large employer whose rate increase meets the ‘unreasonable’ criteria.”

Large employers often use consultants to help them get low rates, and they can self-insure if they think insurers are trying to charge them too much, Gardner says.

Because of the resources large employers have at their disposal, the large-group rate disclosure forms would have limited value, Gardner says.

“We recommend, at most, the disclosure form be required for large group coverage only when state regulators are investigating specific complaints from large employers,” Gardner says.


The American Medical Association, Chicago, and the individuals who represent consumers in NAIC proceedings have asked the NAIC to require health carriers disclosing rate changes to give information about matters such as executive salaries and benefits and broker commissions.

The consumers note that carriers want to be able to ignore random fluctuations in relatively small pools of business that “lack credibility” when regulators are deciding whether the carriers must pay some premium money back to consumers and employers.

“But shouldn’t some requirement of credibility also be imposed on rate increase requests?” the consumer reps ask. “Could not a plan’s bad experience in a particular year be due to random variation, and not justify a rate increase for the following year, when expenses may be much lower?”


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