The Centers for Medicare and Medicaid Services (CMS) plans to use a 10% cut-off to decide whether to look more closely at individual and small group health insurance rate hikes in states.
The 10% threshold will apply both in states where CMS handles rate reviews and in states that do the reviews themselves, officials say.
CMS, an arm of the U.S. Department of Health and Human Services (HHS), will begin to apply the review program rules Sept. 1.
Starting Sept. 1, 2012, each state will get its own review threshold, officials say.
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CMS has described the rate review program regulations in an early version of the 94-page Rate Increase Disclosure and Review final rule.
The final rule, set to appear Monday in the Federal Register, will implement Section 1003 of the Patient Protection and Affordable Care Act of 2010 (PPACA).
PPACA Section 1003 requires HHS and the states to develop a process for conducting annual reviews of “unreasonable increases in premiums for health insurance coverage.”
HHS is encouraging states to conduct their own rate reviews. In states where regulators cannot or will not conduct reviews, an arm of CMS will conduct the reviews.
Originally, the rules were set to take effect July 1; CMS responded to pleas for relief from industry commenters by pushing the effective date back two months.
Many state regulators and insurance industry commenters also had asked CMS to reconsider using a 10% review threshold in every state. They suggested that the 10% threshold would lead to reviewers reviewing virtually all proposed rate increases in many states.
CMS declined to change cut-off.
PPACA Section 1003 gives CMS the authority to require
justification and disclosure of proposed rate increases but no direct authority to block rate increases.