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'Unreasonable' Rate Increase Rule Proposal Scrutinized

Margaret Dick Tocknell, for HealthLeaders Media, April 6, 2011

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.

Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.

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