HHS finalizes rule on insurance premium reviews

Large proposed increases in insurance premiums will be scrutinized by government reviewers starting on Sept. 1 under a final regulation issued by the Dept. of Health and Human Services in May.

The new rule doesn't provide states with the authority to reject rate hikes deemed excessive by state boards or HHS. Only those states with laws requiring prior approval authority can block large rate increases. But the rule does require states to review any proposed increases of 10% or more through a public process that provides consumers with information on why the higher premiums are deemed to be necessary.

"States are going to be, and should be, the primary reviewers," said Steve Larsen, director of the HHS Center for Consumer Information and Insurance Oversight. "And only where we need to fall back on HHS will [the department] be conducting reviews."

HHS has awarded 43 states about $44 million in grants to strengthen their oversight of health insurance premiums. The responsibility to review proposed rate increases will be handed back to HHS when states lack the resources or decline to conduct the reviews.

HHS proposed the rule in December 2010 and finalized the regulation on May 19. Several commenters had advocated that the 10% threshold should be moved higher or lower, but the department kept the benchmark as proposed, Larsen said.

However, the nationwide threshold is only temporary. Starting in September 2012, state-specific thresholds would be implemented.

Insurance plans operated by associations and large group insurers are excluded from the rule, but HHS requested comments on the possibility of reviewing large rate hikes by association plans in the future.

Note: This item originally appeared at http://www.ama-assn.org/amednews/2011/05/30/gvbf0530.htm.