Many state regulators are reining in health payers' ability to raise premium rates at will as they strengthen their review processes and make them more transparent; however, some states still have scant rate reviews in place.
A new Government Accountability Office (GAO) report found that 48 states last year reviewed rate filings and 38 states reviewed proposed premium increases before the rates took effect. However, those reviews ranged from comprehensive examinations to a cursory glance at rate justifications. Just five states reported that over 50 percent of their reviews led to rate hikes being disapproved, withdrawn, or lowered than originally proposed, while 19 states said these outcomes occurred less than 10 percent of the time.
The GAO report also found that most states' rate reviews examined trends in medical costs, benefits provided to policyholders, and insurer's medical-loss ratio, but fewer than half of the states said they also reviewed insurers' capital levels against state-required minimums, reports iWatch News.
Rate review grants provided by the Department of Health & Human Services (HHS) are helping 41 states improve their rate oversight. More than two-thirds of states are hiring staff or outside actuaries and improving their technology that collects and analyzes rate filing data.
Other changes underway include requiring insurers to submit more detailed information in rate filings about medical costs and how premiums are spent on services and tests, buying or collecting additional data to improve analyses of rate filing requests, and posting rate filings online and allowing public comments, iWatch notes.
Steve Larsen, director of the HHS Center for Consumer Information and Insurance Oversight, said the health reform's rate review requirements are bringing more transparency to the rate review process, notes the National Underwriter. But he also clarified that the HHS grants are intended to improve the whole review process and not necessarily require every review proposal to undergo a review, according to the Washington Times. "We're not saying every rate is going to be reviewed as a result," Larsen told a Senate committee. "What we're saying is, it's very important that all rates be subject to a review process to make sure they are justified."