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Rate Increase Disclosure and Review - Final Rule Issued
The U.S. Department of Health and Human Services (HHS) issued the final rule, titled "Rate Increase Disclosure and Review," to ensure that large premium increases will be reviewed thoroughly as required under the Patient Protection and Affordable Care Act (PPACA). “Effective rate review works—it does so by protecting consumers from unreasonable rate increases and bringing needed transparency to the marketplace,” said HHS Secretary Kathleen Sebelius in a released statement.
Under the final rule, which goes into effect on September 1, 2011, insurers seeking rate increases of 10 percent or more over a 12-month period would be subject to closer scrutiny by state and federal regulators as well as stricter public disclosure requirements. The insurance companies will be required to provide consumers with easy-to-understand information about the reasons for the increase. This would be posted to the company website as well as on the HHS healthcare reform website, www.healthcare.gov. The rule will ensure that the public has an opportunity to provide input about rate increases when they are subject to review.
Only individual and small group health plans—not those offered to large employers—are affected by the new rule, which requires insurers to provide a broad overview of what they plan to spend the money on, including how much would go to medical services, profits and administrative costs.
In September 2012, the 10% threshold would be replaced by state specific thresholds. These thresholds will be determined by the insurance and health care cost trends within each state.