Health plans better get used to justifying their rate increases now that the Obama administration wants to review premium increases of 10 percent or more, Lynn Shapiro Snyder, senior member of EpsteinBeckerGreen, warned during the AHIP Institute conference last week in San Francisco.
"Your corporate brand is most at risk," she said, as the government reviews rate hikes and requires more documentation defending the decision. "The government will come to audit. It's not an ‘if.' It's a ‘when,'" Snyder warned. And they will want to see clear quality measurements and proof that a rate increase will lead to increased quality of care and cost containment, she added.
Snyder strongly advised that health plans decide which employees will be involved in determining rate increases. "The more people added to the process, the greater your chance of ensuring you get to the right answer," Snyder said. Plus, it helps guarantee accountability across the board.
Payers also should manage their internal communications regarding rate increase conversation. "Watch how you write emails because they can be misconstrued" when auditors are reviewing whether a rate increase was justified or excessive, Snyder said.
Andrew Hefty, partner with Crowell & Moring, agreed. Avoid emails and internal documents that discuss lowering rebates, he advised, adding that health plans should only discuss how a rate increase results in better outcomes.
"The government is looking to see if you're gaming the system," Hefty said. Sometimes, the image of impropriety is just as bad as the actual impropriety itself.