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HHS Rate Review Findings
Key Finding: HHS says two health insurers have proposed unreasonable increases affecting more than 60,000 enrollees.
Additional Action: HHS sending letter to 13 states offering more rate review grants if they get authority to disapprove increases.
By Sara Hansard
Two health insurers have proposed unreasonable rate increases, and one of the insurer's rates were also unjustified, the Department of Health and Human Services said April 16.
Combined with a determination announced in Wisconsin on April 11, the rate hikes, which are as high as 24 percent, would affect more than 60,000 residents in seven states, said Gary Cohen, director of the oversight group in the Center for Consumer Information and Insurance Oversight. They represent HHS's largest set of determinations of unreasonable and unjustified rate increases to date in terms of the number of consumers affected, he said.
HHS called on the companies to rescind the rates if they are in effect, or to refrain from putting them into effect; to issue refunds to consumers; or to publicly explain why they refuse to do so, Cohen said.
Time Insurance Co. of Milwaukee, a unit of Assurant Health, proposed unreasonable premium rate increases for health insurance in Louisiana, Missouri, Montana, Nebraska, and Wyoming, Cohen said.
In addition, United Security Life and Health Insurance Co., a regional insurer based in Bedford Park, Ill., that sells cancer, disability income, health, and life insurance products to individuals and families in six states, has proposed unreasonable and unjustified health insurance premium increases in Arizona, Cohen said. United's increases are excessive, and it failed to provide the federal government sufficient information to determine whether its proposed increase was based on sound data, he said.
Under the Patient Protection and Affordable Care Act, HHS has the authority to determine whether premium rate increases are unreasonable in states that do not conduct rate reviews that HHS finds to be adequate. HHS does not have authority to overturn rate increases, but companies found to be raising rates unreasonably must post justifications on HHS's website, as well as on their own website. Under HHS's rate review regulation, it reviews all rates of 10 percent or more to determine whether they are unreasonable.
Cohen also said the determinations, made by independent actuarial experts, were based on whether the companies made reasonable assumptions about the increases expected in their costs. A finding that a rate increase is unjustified is based on whether the company provided enough data to make a rate projection, he said.
She added that the company “uses medical trend data that factors in both the rising cost of health care and the utilization of medical services and prescription drugs by our customers in determining premium rates.”
United Security could not be reached for comment April 16.
Under PPACA, individual and small group plans must spend at least 80 percent of premiums on medical claims or quality improvements, and large plans must spend at least 85 percent or refund the difference to consumers. The policies affected by the rate determinations were all in the individual market, except for one small group plan operating in Missouri and one small group plan operating in Wyoming, Cohen said.
Cohen said that the rate review program has led to insurers proposing fewer double-digit increases. In addition, more states have taken an active role in reducing rate increases, and consumers are getting more information on why rates are being raised by 10 percent or more, he said.
By Sara Hansard
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