CMS Memo Explains Rate Review Amendments
September 30, 2011
CMS Memo Explains Rate Review Amendments
Rate Review under PPACA
The rate review process under PPACA went into effect on September 1, 2011. The rate review process applies when a rate increase of 10% or more is filed for a non-grandfathered individual or small group product. States that have “effective” rate review programs will conduct the review themselves, while for states identified as having an “ineffective” rate review process, the Department of Health and Human Services (HHS) will conduct the review.
Consumers can go to companyprofiles.healthcare.gov for information explaining proposed increases of 10% or more. Consumers will see a summary of the key factors driving rate increases and an explanation provided by the insurance company for why the proposed increase is needed.
On September 27, 2011, the Centers for Medicare and Medicaid Services (CMS) published a memo explaining amendments that it made on September 6 to the Rate Increase and Disclosure regulations changing the definition of individual and small employer markets with respect to insurance products sold to associations.
Effective November 1, 2011, the definition of “individual market” was amended to embrace coverage that would be regulated as individual market coverage if it were not sold through an association. Similarly, the definition of “small employer market” was amended to embrace coverage that would be regulated as small group market coverage were it not sold through an association. As a result, rate increases of 10% or more weighted average with respect to group insurance policies/HMO service agreements issued to associations providing coverage to individuals or small groups must be reported to the federal Rate Review program through the Health Insurance Oversight System (HIOS). The regulations defer to the applicable state law definition of individual market and small group market. If a state doesn’t have a definition, then the Patient Protection and Affordable Care Act definition applies except that small employer is defined as 50 employees instead of 100. The rate filing requirement now extends to association products that were previously excluded from state law definitions of individual and small group coverage.
Issuers selling only association products were previously not required to report rate review information for the Health Insurance Plan Finder at HealthCare.gov. This new regulation requires those issuers to report to the Rate Review program using the HIOS tool.
The Centers for Consumer Information and Insurance Oversight (CCIIO) is still determining which states have effective rate review programs for association coverage. The announcement, which is expected around October 15, will clarify whether the state, or CCIIO, will be responsible for making final rate review determinations.
For more information on rate review, visit cciio.cms.gov.
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