Friday, August 20, 2010

Maine to Receive $1 Million to Crack Down on Health Insurance Premium Hikes

HHS Secretary Kathleen Sebelius on Aug. 16 announced the award of $1 million to Maine to help crack down on health insurance premium increases. Maine will use this Affordable Care Act funding to help improve the oversight of proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure Mainers receive value for their premium dollars.
“The Affordable Care Act puts in place critical market reforms to improve quality and reduce the cost of health care for employers and individuals. Increased competition, lower insurance overhead, and better risk pooling in health insurance Exchanges in 2014 are expected to reduce premiums in the individual market by anywhere from 14-20 percent according to the Congressional Budget Office,” said HHS Secretary Kathleen Sebelius. “Between now and then, we will continue to work with States to ensure consumers are receiving value for their premium dollars and to avoid the kind of double digit premium increases seen recently. The State proposals approved today demonstrate the need and desire for new resources and tools to help them protect against unjustifiable premium increases.”
The Affordable Care Act provides States with $250 million in Health Insurance Premium Review Grants over five years to help create a more level playing field by improving how states review proposed health insurance premium increases and holding insurance companies accountable for unjustified premium increases. Applications for the first round of Health Insurance Premium Review Grants were made available on June 7.
The grants build on the Obama Administration’s work with States to implement the Affordable Care Act. Earlier this year, Secretary Sebelius called on certain insurance companies to justify large premium increases and encouraged State and local officials to obtain stronger health insurance premium review authorities under State laws. This increased scrutiny by the Administration and by several States has led to the withdrawal or reduction of several proposed health insurance premium increases that in some cases turned out to be based on faulty assumptions and data.
This grant will be used for the purposes detailed in the approved application. The following is a general summary of how Maine intends to use its funding:
Expand the Scope of the Review Process: Currently, Maine has prior approval review authority for all individual and small group market products. Carriers may elect to meet a three-year average medical loss ratio guarantee (meaning they will spend a certain percentage of premium dollars on medical care rather than overhead or profits) and avoid prior approval in the small group. Maine will expand its current practice of health insurance premium review by collecting and analyzing small group market data from carriers electing the loss ratio to inform the Department if additional statutory authority is needed.
Improve the Review Process: At present, Maine’s informational filings lack sufficient detail to determine full compliance with the law. The State plans to collect additional information on small group rates. Additionally, Maine will collect historical and projected cost and utilization trend data to establish benchmarks.
Increase Transparency and Accessibility: Maine posts extensive rate filing information on its website, and encourages consumer participation in the rate filing process by hosting field hearings in addition to formal hearings. Maine will encourage increased participation of consumer advocacy groups in rate hearings and will compile submitted rate filing information into a consumer-friendly format for posting on its website.
Develop and Upgrade Technology: Maine will upgrade its systems to improve efficiency and aid in the health insurance premium review process. The State will also establish a data center to compile and publish fee schedule information.