Implementation: To Do List

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Grants for Rate Review
(Section 1003, as amended by section 10101, of the Patient Protection and Affordable Care Act; Creates Section 2794 of the Public Health Services Act)

Under health reform, the Secretary of HHS will work with the states to establish a process for annually reviewing premium increases requested by insurance companies. Insurers will have to justify unreasonable rate increases prior to implementing the increases and post information about rate increases online. Based on this rate review process, states can eventually recommend that any insurers with unreasonable rate hikes be prohibited from selling plans through the exchange. Meanwhile, depending on the laws in your state, your insurance department may be able to deny or reduce a proposed rate increase. To help states implement the rate review process, $250 million in federal grant funding will be available to states over a five-year period, starting in 2010.

To do:

• Encourage your state/ insurance regulators to apply for grants.
• Educate your state legislature and insurance regulators on what legislation your state needs to pass to enhance its rate review process. For example, are rate filings and their justifications public? Is the public notified and invited to comment on proposed rate increases? Would it help to establish a threshold beyond which rate increases should be more carefully scrutinized? Does your state require consideration of the following in setting rates: affordability and likely effects on enrollment, reserves, and surplus; the reasonableness of administrative expenses; the reasonableness of executive compensation; equity of the premium structure, given community needs and the insurer’s mission; profitability, surplus, reserves, and investment savings of the insurer over time; changes in covered benefits and plan design; the insurer’s health care cost containment and quality improvement efforts, and their results?
• Respond to the federal government's requests for comments about rate review processes and how they should improve.

Additional Resources:

• From consumer representatives to the National Association of Insurance Commissioners (NAIC): Recommendations for Regulators and Lawmakers on Health Reform Implementation provides recommendations on how best to implement specific provisions in health reform, including grants for rate review on page 1. (May 2010)
• Rate Review: Holding Health Plans Accountable for Your Premium Dollars (Families USA, March 2010)
• Medical Loss Ratios: Making Sure Premium Dollars Go to Health Care (Families USA, February 2010)
• Requests for public comments to help guide federal agencies as they prepare to implement health reform (Federal Register, April 14, 2010)
  • About Comments on Rate Review Processes
    • Families USA's Comments on Rate Review Processes (submitted 5/13/10) 
  • About Comments on Medical Loss Ratio Requirements

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