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HHS releases new report showing how rate review protects consumers
U.S Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today announced Affordable Care Act grant awards of $3,958,844 to Wisconsin that will help fight unreasonable premium increases and protect consumers. Today, HHS also released a new report entitled Rate Review Works detailing how previous rate review grants are fighting premium hikes and helping make the health insurance marketplace more transparent.
“We’re committed to fighting unreasonable premium increases and we know rate review works,” said Secretary Sebelius. “States continue to have the primary responsibility for reviewing insurance rates and these grants give them more resources to hold insurance companies accountable.”
As of September 1, 2011, the Affordable Care Act requires health insurers seeking to increase their rates by 10 percent or more in the individual and small group market to submit their request to experts to determine whether the rates are unreasonable. The Affordable Care Act also requires insurance companies to publicly justify unreasonable premium rate increases. These provisions will bring greater transparency, accountability, and, in many cases, lower costs for families and small business owners who struggle to afford coverage.
The Affordable Care Act provides States with $250 million in Health Insurance Rate Review Grants, $48 million of which has previously been awarded to 42 States, the District of Columbia and five territories. As outlined in the new report, these grants and other State rate review efforts are already making a difference in Wisconsin. Wisconsin’s Office of the Commissioner of Insurance focused its grant efforts on standardizing its filing formats and enhancing its rate review procedures. To implement these changes, the Office developed a rate tracking system to allow the State to monitor, analyze, and publicize rate filing activity.
The grants awarded today help to create a more level playing field by improving how States review proposed health insurance rates and holding insurance companies accountable for disclosing information about unjustified rate increases.
Wisconsin is proposing to use Cycle II grant funds in the following ways:
* Expand scope of rate review: Wisconsin introduced legislation in Cycle I (still pending) to apply its individual market standards (including disapproval of rates) to the small group market.
* Improve rate filing requirements: Wisconsin will implement the enhanced rate review process developed in Cycle I and will conduct annual market surveys of the individual and small group markets.
* Improve transparency and consumer interfaces: The Wisconsin website will accept and review comments from consumers, post rate filing consumer summaries, and allow consumers to sign up for notifications of submission of rate filings.
* Hire new staff: Wisconsin will continue to support the 5 positions created with Cycle I grant funds throughout Cycle II.
* Improve IT: Wisconsin will create an online system for insurers to submit relevant rate filing data. The State will also enhance its Rate Tracking System by expanding the scope of information collected and automating the collection that is currently done manually, including the capability to run standard reports.
A chart summarizing how each State will use the new resources can be found here.
“The proposals from the States overwhelmingly demonstrate the need, and desire, for new resources and tools to hold insurance companies accountable,” said Steve Larsen, Director of the Center for Consumer Information and Insurance Oversight. “Thanks to the Affordable Care Act, States will have more of the tools they need to crack down on insurance companies that want to pass unreasonable premium hikes on to hard working families.”
Information about significant State achievements with previous rate review grants can also be found here.
Rate review builds on other provisions in the Affordable Care Act to help make health insurance more affordable for individuals, families, and businesses. Other steps the law takes to help make insurance more affordable include:
* Insurers are generally required to meet a medical loss ratio standard to spend at least 80 percent of premium dollars on health care and quality-improvement activities as opposed to overhead, advertising, and executive bonuses. Insurers that fail to meet that standard must either reduce premiums or pay rebates to consumers and employers;
* Small businesses are eligible for Federal tax credits of up to 35 percent of the cost of coverage for their workers. That amount rises to 50 percent by 2014; and
* In 2014, the Affordable Insurance Exchanges will use competition and transparency, including information on excessive or unjustified premium increases, to help make insurance more affordable.
The Affordable Care Act includes a variety of provisions designed to promote accountability, affordability, quality, and accessibility in the health care system for all Americans, and to make the health insurance market more consumer-friendly and transparent. Some of the provisions are already in effect, including prohibitions on pre-existing condition exclusions for children; prohibitions on lifetime dollar limits in all health plans; extended access to insurance for many young adults; and an unprecedented level of transparency about health insurance through http://www.HealthCare.gov.
For the full Rate Review Works report, please visit: http://www.healthcare.gov/law/resources/reports/rate-review09202011a.pdf
For a fact sheet on the awards announced today, please visit:
http://www.healthcare.gov/news/factsheets/2011/09/rate-review09202011a.html
