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March 2011 St@teside

Rate Review Process Gets a New Boost

On February 24, the U.S. Department of Health and Human Services (HHS) announced the availability of $200 million in new grant funds for states to develop rate review programs in response to the Patient Protection and Affordable Care Act (ACA) provisions requiring HHS, in conjunction with the states, to establish a process for annual review of “unreasonable” rate increases. The new grants will supplement the $46 million received by states in August 2010 to enhance their rate review procedures. In December 2010, HHS proposed a rule requiring all premium rate increases of more than 10 percent for individual or small group plans be reviewed by states and HHS.

Over the past year, some states have taken a more active role in controlling rate increases. These actions have recently resulted in increased cooperation between state insurance officials and carriers. After Massachusetts Governor Deval Patrick took some aggressive steps to address extreme rate increases last year, insurers are filing for increases below 10 percent for individual and small business health policies renewing in April.1  In California, where a law expanding regulatory authority was recently passed, Blue Shield of California withdrew a rate filing with the state insurance commissioner’s office stating that there would be no further rate increases in 2011 for its individual policyholders.2

Other states are also considering legislation that would strengthen a state’s ability to regulate rate increases. Most recently, New Mexico’s legislature approved a bill that would accomplish that goal.  The bill includes a number of reforms including a stronger standard for review, new criteria for evaluating whether rates are reasonable, stronger transparency for consumers to help them understand and consider rate hikes, and new avenues for consumers to participate in the rate review process.  The bill has not yet been signed by Governor Susana Martinez.

1Valliere, R. (2011, February 28).  Insurers File for Smaller Hikes After 2010 Clash With Gov. Patrick Administration. BNA’s Health Care Policy Report (Subscription only). Retrieved March 25, 2011, from
2Rizo, C. (2011, March 21). Blue Shield of California Withdraws Planned Rate Hike; Officials Laud Move. BNA’s Health Care Policy Report (Subscription only). Retrieved March 25, 2011, from