Patrick-Murray Administration's Division of Insurance Announces Decision on Rate Increase Submissions from Health Insurers

BOSTON - April 1, 2010 - The Patrick-Murray Administration's Division of Insurance today disapproved 235 of the 274 rate increases filed by health insurers for small businesses. Insurance Commissioner Joseph G. Murphy disapproved the base rates after they were found to include excessive increases and rates unreasonable relative to the benefits provided.

Because of today's action, small businesses will realize immediate relief from double-digit premium increases. Policyholders who have already made a premium payment under the disapproved rate will receive a refund or credit on their base rates.

Commissioner Murphy disapproved the rate filings through an emergency regulation, which was filed on February 10 at Governor Patrick's direction as part of his efforts to reduce skyrocketing health care costs for small businesses. Previously, carriers filed rate changes before or on the effective date of the new rates. The amended regulation requires that carriers file small-group rates 30 days before their effective date and that additional actuarial information be included with the proposed rate changes, enabling the Division of Insurance to perform an in-depth evaluation of the proposed rate changes and to determine their reasonableness.

"At the beginning of this process and throughout our review of the rate filings, we made it clear to insurers that the Division of Insurance would be taking a close look at proposed increases," said Commissioner Murphy. "In most cases, Division staff determined that the changes were excessive and necessitated disapproval."

The Division issued letters to the carriers today, outlining the reasons for the disapprovals. Generally, they consisted of at least three common deficiencies:

  • The disapproved rate filings failed to illustrate how the carriers pay similarly situated providers differing rates of reimbursement based solely on quality of care, mix of patients, intensity of services, and geographic location at which care is provided.  
  • The disapproved rate filings failed to demonstrate that carriers have renegotiated provider reimbursement rates;  
  • The disapproved rate filings were significantly above the medical consumer price index and the filings could not adequately explain the wide difference.

"This review effort by the Division of Insurance is one piece of the comprehensive effort by the Patrick-Murray Administration to reform small-group health insurance," said Barbara Anthony, the Undersecretary of the Office of Consumer Affairs and Business Regulation. "It is vital that we work with insurers and providers to lower these costs that are hurting our small businesses and families."

For more on the Division of Insurance's efforts in small-group health insurance, including testimony from small-business owners and background on previous hearings held on the issue of health insurance, visit