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HHS Questions 71% of the Rate Hikes Reviewed

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U.S. health insurers have had to post explanations of 186 individual health insurance rate increases on the Web since new federal rate review rules took effect Sept. 1, 2011.

The U.S. Department of Health and Human Services (HHS) and state insurance regulators started the rate review program to implement a section of the Patient Protection and Affordable Care Act of 2010 (PPACA).

PPACA does not give state or federal regulators the authority to limit rate increases, but it does give HHS the authority to require health insurers to explain what HHS believes to be “unreasonable” rate increase on the Web.

The federal government’s rate review disclosure website has attracted about 50,000 visitors, officials say.

HHS officials have said in regulations that state regulators with the ability and willingness to review rate changes should review the reasonableness of any notices of increases over 10%. In states in which state regulators are unable or unwilling to review rates, HHS handles the task.

The 186 double-digit rate increases announced from Sept. 1, 2011, through March 10, 2012, could affect a total of 1.3 million people, officials say in a report on the performance of the rate review program.

HHS has reviewed 61 of the rate filings subject to reviews and completed 28 of the reviews, and state regulators have reviewed 125.

Regulators in some of the states have had the authority to reduce or reject rate increases since before PPACA was enacted, and regulators in other states have gained rate-control authority since the act was signed into law.

States have required or persuaded insurers to reduce the increases they have reviewed by an average of 6.4%, officials say.

HHS has concluded that 71% of the 28 rate increase proposals it has reviewed were unreasonable.

The most common reason was that another PPACA provision requires plans to spend 80% of individual and small group revenue on health care or quality improvement efforts, and federal regulators believed the proposals would result in projected medical loss ratios below 80%.

Kentucky, Nevada and Texas are some of the states that report seeing a reduction in the number of insurers announcing rate increases exceeding 10%, officials say.

California, New York and Oregon are some of the states in which regulators have taken active steps to reduce proposed increases, officials say.

The average size of rate increase reductions seems to be growing over time, and, in Nevada and Oregon, individual rates seem to be falling as a result of the rate review program, officials add.

HHS officials do not discuss in the report whether they have taken any steps to verify whether reductions in rate increase requests are warranted or whether, in any cases, cuts in proposed rates have led to losses at insurers or cutbacks in the scope of insurers’ operations.



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