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Larsen: PPACA Rate Review Rules Work

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WASHINGTON BUREAU — An Obama administration official defended the Patient Protection and Affordable Care Act (PPACA) rate review provisions today at a Senate hearing.

Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pension Committee — the committee that organized the hearing — said the PPACA rate review provisions are helping to rein in health insurance premiums.

Sen. Mike Enzi, R-Wyo., said PPACA is already driving up insurance premiums.

Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the U.S. Department of Health and Human Services (HHS), testified that the PPACA rate review provisions are bringing more transparency to the rate review process and that those provisions and others, such as the minimum medical loss ratio (MLR) provisions, already are making a differences in states such as North Carolina.

The PPACA rate review provisions and HHS rate review regulations require either state or federal officials to review notices of health insurance rate increases that exceed 10% and require that information about the proposed increases be posted on the Web.

The minimum MLR provision requires insurers to spend at least 85% of large group premiums and 80% of individual and small group premiums on health care and quality improvement or else pay customers rebates.

In North Carolina, Larsen said, the minimum MLR system has already caused Blue Cross and Blue Shield of North Carolina, Chapel Hill, N.C., to refund about $156 million to 215,000 customers.

John Dicken, a director at the U.S. Government Accountability Office (GAO), testified that state regulation of health insurance premiums has been spotty in the past but that HHS rate review grants are now helping 41 states make changes designed to improve their oversight of health insurance premium rates.

Dicken testified that:

  • 48 out of the 50 states that responded to a GAO survey said they reviewed rate filings in 2010.
  • 38 states reported that in 2010 all rate filings reviewed were reviewed before the rates took effect; other respondents reported reviewing at least some rate filings after they went into effect.
  • About half of the participants are using federal grants to look at existing rate review processes or develop new processes.
  • More than two-thirds of the states said they have begun to make changes to increase their capacity to oversee premium rates, including hiring staff or outside actuaries, and improving the information technology systems used to collect and analyze rate filing data.

“Finally, more than a third reported that their states have taken steps–such as introducing or passing legislation–in order to obtain additional legislative authority for overseeing health insurance premium rates,” Dicken said.

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