Rate reviews to strengthen with $109M HHS grants

Insurers likely will start seeing their premium increase requests get even more scrutiny now that the Department of Health & Human Services (HHS) has doled out $109 million in additional grants for states' rate review programs.

Most of that money is going to states with the legal authority to prevent insurers from implementing their proposed rate hikes. Of the 29 awardees, 20 have prior-approval authority, reports The Hill's Healthwatch.

Seven states will use their grant to introduce bills that would strengthen their authority to review or publicize proposed rate increases, and 19 states and the District of Columbia plan to use the grant money to expand the scope of rate review programs, according to the National Underwriter.

"We absolutely expect for this ... to help have a moderating influence on premiums," said Steve Larsen, who oversees the health reform implementation for HHS.

The grants are in addition to the $48 million HHS provided to 42 states last year. States used that money to, for example, hire additional regulators and strengthen information technology systems to review proposed premium hikes, the Los Angeles Times reports.

Although insurance industry officials maintain that additional rate review oversight is unnecessary, Larsen said insurers have continued to seek double-digit increases despite the current drop in consumer demand for medical services, notes the LA Times. He added that HHS has seen anecdotal evidence that increased scrutiny has repressed insurers' price increases in some states.

In fact, HHS released a report, "Rate Review Works," that demonstrates how states have used federal funds to improve their rate review process. For instance, Utah didn't employ any analysts to review rates, but it used the first round of grants to review all submitted rate filings, the National Underwriter notes. Additionally, the rate review grants helped North Carolina regulators return roughly $14 million to consumers last year, while several other sates blocked or deeply reduced proposed hikes, Healthwatch notes.

To learn more:
- read the HHS report (.pdf)
- see the Los Angeles Times article
- read the National Underwriter article
- check out The Hill's Healthwatch article

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