New proposed federal rules will allow the Department of Health and Human Services to work with states on health insurance rate reviews, and will require carriers to publicly justify rate increases that are considered unreasonable. The process will help states filter health plans with a pattern of excessive or unjustified rate hikes out of new health insurance exchanges in 2014.
The proposed regulation, announced Tuesday by HHS, will require carriers in 2011 to publicly disclose rate increases of 10 percent or higher. The rate hike will also be "thoroughly reviewed" to determine if it's unreasonable.
After 2011, state-specific thresholds would be set using data and trends that better reflect cost trends particular to each state, according to HHS. Insurance company's justifications for unreasonable increases will be posted on HealthCare.gov and the insurance plan's website.
"The proposed rate review policy will empower consumers, promote competition, encourage insurers to do more to control health care costs and discourage insurers from charging premiums which are unjustified," said Jay Angoff, director of HHS' Office of Consumer Information and Insurance Oversight, in a released statement.
The department has begun awarding grants to states to strengthen their review system of rate increases. In August, HHS awarded $46 million to 45 states and the District of Columbia. This is part of $250 million that the health reform law makes available to states to take action against insurers seeking unreasonable rate hikes.
States with effective review systems will conduct the rate reviews, otherwise the task falls to HHS.
The department says it will continue to make resources available to states to strengthen their rate review processes.
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