x x x


News from the Blues

Blue Cross and Blue Shield reports

“January 5, 2011

Legislative Update [All Markets]

The Department of Health & Human Services (HHS) has released a proposed regulation that would institute a new review process for requests by health insurance companies for rate increases.

The proposed rule, announced Dec. 20, 2010, would institute a new review process that may be administered by states, if HHS determines that they have an “effective” rate review program, or by HHS if a state process is not considered effective. HHS expects to implement the new process by July 2011.

HHS proposes that this process become effective for rates filed or in use on or after July 1, 2011 in the individual and small group markets. This rule would not apply to grandfathered or excepted benefits.

In states that are determined to have an “effective” rate review program, HHS will defer to the state to determine whether a rate increase is unreasonable. However, the state must still report to HHS its determination – whether reasonable or unreasonable – and include a rationale for making its decision.

HHS defines an effective state review process based on the following four factors:

  • Whether the state receives data and documentation from insurers sufficient to determine whether a rate increase is unreasonable;
  • Whether the state effectively reviews the data and documentation submitted by the insurer;
  • Whether the state review examines the reasonableness of the assumptions used by the issuer in developing its rate proposal and the historic data underlying those assumptions; and
  • Whether the state applies a standard set forth in statute or regulations when making the determination of whether a rate increase is unreasonable.

The proposed trigger for the new review process is if an insurer’s “weighted average increase” is 10 percent or more for the rate filing. HHS lists what analysis must be done by states, which would include looking at reserve needs as well as the “risk-based capital status relative to national standards.”

Blue Cross and Blue Shield of Illinois is reviewing the proposed rule and will provide updates as more information is made available.

Enhanced by Zemanta

Tags: , , ,

Comments are closed.

Newsletter Signup

Free Consultation
Change Your Broker
x x x