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The Catch

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California has put some of its own teeth in its health insurance rate review laws.

California Gov. Jerry Brown, D, has signed S.B. 51, which will make the new federal medical loss ratio (MLR) rules created by the Patient Protection and Affordable Care Act of 2010 (PPACA) part of state law.

The main PPACA MLR provision requires carriers to spend at least 85% of large group premium revenue and 80% of individual or small group premium revenue on health care and quality improvement efforts.

By putting the MLR requirements in California state law, the state government has increased the likelihood that the requirements will apply in California even if part or all of PPACA is repealed by Congress or struck down by the U.S. Supreme Court. The law is set to take effect Jan. 1, 2012.

S.B. 51 was sponsored by Dave Jones, the California insurance commissioner, and authored by state Sen. Elaine Alquist, D-Santa Clara, Calif.

California regulates health maintenance organizations separately from insurers. In California, the MLR rules will apply to HMOs as well as to insurers.

In the past, some California health insurers have had MLRs as low as 60%, officials say.


In Washington, the U.S. Department of Health and Human Services (HHS) is seeking emergency clearance for the PPACA health insurance rate review program.

The federal Paperwork Reduction Act of 1995 requires many federal information collection efforts to undergo review by the Office of Management and Budget (OMB).

HHS says it needs to put the rate review program, which will apply to insurer notices of increases in individual or small group rates of more than 10%, through an emergency clearance process to comply with PPACA Section 1003.

PPACA Section 1003 requires HHS to get the rate review and rate increase disclosure program into effect by 2012.

The Centers for Medicare & Medicaid Services (CMS), an arm of HHS, proposed the rate review program regulations in December 2010, then published a final version in May.

CMS will be sharing the rate review job with states found to have “effective rate review programs.”

Insurers increasing rates more than 10% will have to provide more information than other insurers, to give regulators the data they need to determine whether increases are unreasonable, officials say in an HHS notice set to appear in the Federal Register Wednesday.

HHS is estimating it will get about 1,200 responses per year from 452 respondents.

Comments on the information collection are due Oct. 21.

CMS wants OMB approval for the information collection by Oct. 31