HHS releases new report showing how rate review protects consumers
WASHINGTON--(BUSINESS WIRE)-- U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today announced Affordable Care Act grant awards of $3,531,085 to Illinois that will help fight unreasonable premium increases and protect consumers. Today, HHS also released a new report entitled Rate Review Works detailing how previous rate review grants are fighting premium hikes and helping make the health insurance marketplace more transparent.
“We’re committed to fighting unreasonable premium increases and we know rate review works,” said Secretary Sebelius. “States continue to have the primary responsibility for reviewing insurance rates and these grants give them more resources to hold insurance companies accountable.”
As of September 1, 2011, the Affordable Care Act requires health insurers seeking to increase their rates by 10 percent or more in the individual and small group market to submit their request to experts to determine whether the rates are unreasonable. The Affordable Care Act also requires insurance companies to publicly justify unreasonable premium rate increases. These provisions will bring greater transparency, accountability, and, in many cases, lower costs for families and small business owners who struggle to afford coverage.
The Affordable Care Act provides States with $250 million in Health Insurance Rate Review Grants, $48 million of which has previously been awarded to 42 States, the District of Columbia and five territories. As outlined in the new report, these grants and other State rate review efforts are already making a difference in Illinois:
- In the past year, Illinois has utilized the rate review grant funding to establish an effective rate review program. Specifically, the State has developed a process to collect, analyze, and review rates for reasonability, established a web portal to receive rate information from insurers, added additional staff within the Department of Insurance to collect and analyze filings, contracted with a consulting firm to provide actuarial review services, and held meetings, conducted webinars, and developed web tools to engage consumers in efforts to improve premium review in Illinois.
- In December 2010 as a result of receiving rate review grant funds, the Department issued a bulletin requiring all carriers to file a schedule of base rates and supporting actuarial documentation. Previously, most carriers did not have to file with the Department. The Department was able to establish its own portal to collect rate data from insurers. Each rate filing must now be submitted with a newly developed standardized form that requires insurers to provide information on premium increases, loss ratios, earned premiums, paid claims, and incurred claims.
The grants awarded today help to create a more level playing field by improving how States review proposed health insurance rates and holding insurance companies accountable for disclosing information about unjustified rate increases.
Illinois is proposing to use Cycle II grant funds in the following ways:
- Expand scope of rate review: Illinois is collecting rates in the individual and small group markets via a Bulletin issued during Cycle I of the rate review grant program.
- Improve rate filing requirements: Illinois will utilize a rate submission checklist to promote consistency among insurer rate filings. Illinois also proposes developing a standardized template for reporting filings that are subject to review as outlined in the Final Rule. Illinois will analyze incoming rate data to identify market trends and generate reports for consumer outreach and financial and actuarial analysis.
- Improve transparency and consumer interfaces: Illinois has proposed a new hire (data analyst) to draft an "annual report" to inform consumers about market changes. Illinois also proposes enhancing its website to include rate filings, "unreasonable" determination information, a consumer-friendly summary of the Department's filing decisions, and consumer comment capability. Illinois will also conduct webinars on its enhanced rate review program.
- Hire new staff: Illinois plans to create 5 new positions with the Cycle II awards, these positions are in addition to the 5 positions created with Cycle I resources.
- Improve IT: Illinois will enhance its rate review web portal by expanding the ability to collect additional information, creating the functionality to update its web tool when rate increases are submitted, creating a web tool for consumers on group rates (currently only individual rates are available), and establishing a tool to conduct automated analyses of rate data to identify trends.
A summary of how each State will use the new resources can be found in the report released today.
“The proposals from the States overwhelmingly demonstrate the need, and desire, for new resources and tools to hold insurance companies accountable,” said Steve Larsen, Director of the Center for Consumer Information and Insurance Oversight. “Thanks to the Affordable Care Act, States will have more of the tools they need to crack down on insurance companies that want to pass unreasonable premium hikes on to hard working families.”
Information about significant State achievements with previous rate review grants can also be found in the report.
Rate review builds on other provisions in the Affordable Care Act to help make health insurance more affordable for individuals, families, and businesses. Other steps the law takes to help make insurance more affordable include:
- Insurers are generally required to meet a medical loss ratio standard to spend at least 80 percent of premium dollars on health care and quality-improvement activities as opposed to overhead, advertising, and executive bonuses. Insurers that fail to meet that standard must either reduce premiums or pay rebates to consumers and employers;
- Small businesses are eligible for Federal tax credits of up to 35 percent of the cost of coverage for their workers. That amount rises to 50 percent by 2014; and
- In 2014, the Affordable Insurance Exchanges will use competition and transparency, including information on excessive or unjustified premium increases, to help make insurance more affordable.
The Affordable Care Act includes a variety of provisions designed to promote accountability, affordability, quality, and accessibility in the health care system for all Americans, and to make the health insurance market more consumer-friendly and transparent. Some of the provisions are already in effect, including prohibitions on pre-existing condition exclusions for children; prohibitions on lifetime dollar limits in all health plans; extended access to insurance for many young adults; and an unprecedented level of transparency about health insurance through www.HealthCare.gov.
For the full Rate Review Works report, please visit: http://www.healthcare.gov/law/resources/reports/rate-review09202011a.pdf
For a fact sheet on the awards announced today, please visit: http://www.healthcare.gov/news/factsheets/2011/09/rate-review09202011a.html
Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news.
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HHS Press Office
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KEYWORDS: United States North America District of Columbia Illinois
INDUSTRY KEYWORDS: Health Public Policy/Government Healthcare Reform State/Local White House/Federal Government Professional Services Insurance General Health
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