By Jane Norman, CQ HealthBeat Associate Editor
December 17, 2010 -- The National Association of Insurance Commissioners (NAIC) has recommended a standard form to the federal government that insurers would fill out to justify "unreasonable" increases in health insurance premiums.
The Department of Health and Human Services (HHS) is expected sometime within the next few days to issue its proposed regulation on how to define an "unreasonable" increase—an issue the NAIC did not tackle—and the form insurers would use to justify any rate hike HHS officials determine unreasonable. The regulation is now under review by the Office of Management and Budget.
Both insurers and consumer advocates are keeping a close eye on the regulation's release. The health care law (PL 111-148, PL 111-152) didn't put a cap on health care premium increases. Instead it instructed HHS to work with states—the traditional overseers of insurance—to set up a process to review rate increases.
The proposed form, which would disclose a great deal more information than is generally available to the public, was adopted Thursday in a conference call of NAIC committee members. "Our work is a fitting capstone to a year of tremendous effort and collaboration," said Jane L. Cline, president of the NAIC and the West Virginia insurance commissioner.
However, HHS is under no obligation to use the wording and structure in the form recommended by the state insurance regulators.
NAIC members cautioned in a published summary that "adoption of this form is not intended to be considered an endorsement of any definition of unreasonable that HHS ultimately may develop and the form clearly states it does not apply to the large group market."
The regulators also appear somewhat uneasy with the regulation. They note they have been "very clear" that the term "potentially unreasonable" rather than "unreasonable" should be considered by HHS.
They said they have also cautioned HHS to avoid an arbitrary standard in defining unreasonable "since there are many valid reasons for rate increases." A simple standard could identify a rate increase as unreasonable when in fact it is actuarially justified, they said.
Under the health care law, HHS is supposed to work with states to conduct annual reviews of increases that are considered "unreasonable" though HHS gets the final word on defining the term (See related story).
Insurers that have levied increases deemed unreasonable will have to provide detailed explanations and financial information to the states, the federal government and consumers. All the information will have to be posted on plan Web sites.
The form adopted by the NAIC includes that information as well as sections on the rate request, the components of the average rate increase or decrease, the basis of the rate request, the projected results of the proposed rates and more.
The NAIC also cleared draft model exchange act legislation that saw only minor changes from earlier versions.
