'Unreasonable' Rate Increase Rule Proposal Scrutinized

HHS announced in February that it would make available nearly $200 million in grants to help states combat "unreasonable premium increases."

The proposed HHS rule sets these parameters:

• Defines "unreasonable"as an excessive increase (above the 10% threshold), an unjustified increase (unsupported by data or documentation) or a discriminatory increase (premium increases are different for individuals with the same risk characteristics such as age and geographic location).
• Permits HHS to conduct the rate review if the state doesn't have the resources or lacks the authority to conduct an effective review.
• Requires insurers to submit a preliminary justification for the rate increase request, including any support data.
• Denies HHS the authority to reject unreasonable rate increases although some states will have that authority.
•  Allows insurers to withdraw, reduce or continue with the unreasonable rate increase depending on state laws and regulations.
• Requires an insurer to disclose on its company website any rate increases identified as unreasonable and to provide HHS with a final justification for proceeding with the unreasonable rate increase.
• Allows review information to be posted on the HHS website.

Health plan leaders polled for HealthLeaders Media's Industry Survey 2011, cited "government laws and mandates" as a top driver of healthcare costs, second only to overutilization of services.

HHS is expected to respond to public comments and release a final rule later this year. The Health Affairs brief is available here.