WASHINGTON BUREAU — A proposed federal regulation could require health insurers to publicly disclose efforts to seek double-digit rate increases in the individual and small group markets.
The U.S. Department of Health and Human Services (HHS) has unveiled an early version of the proposed rate review rule today and intends to publish it Thursday in the Federal Register.
HHS would not necessarily assume that double-digit increases would be unreasonable, but it would give applications for large rate hikes close scrutiny.
“This new proposed rate review regulation will also work in conjunction with the medical loss ratio [MLR] 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 officials say 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,” officials say.
The Affordable Care Act is the legislative package that includes the Patient Protection and Affordable Care Act (PPACA).
NUTS AND BOLTS
The proposed rate review regulation calls for states with “effective rate review systems” to conduct their own reviews.
If a state lacked the resources or authority to do thorough actuarial reviews, HHS would conduct the reviews.
At first, the same disclosure rules would apply to reviews performed by HHS or by state regulators.
HHS would post information about the outcome of all reviews of requested increases above 10%, and the insurers’ explanations of the increase requests, on the Web.
An insurer also would have to post justifications for big rate increase requests on its own website.
After 2011, a state-specific threshold would be set for the disclosure of rate increases, using data that reflect each state’s cost trends.
HHS says in a statement that it will finance state efforts to strengthen their own rate review processes.
The proposed regulation is designed to help “safeguard consumers from unreasonably high rate increases by providing consumers with detailed information on proposed increases,” HHS says. “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.”
HHS says the disclosure rules would promote competition and encourage insurers to do more to control costs.