Health Insurers Must Justify Rate Increases

WASHINGTON (CN) – Two federal agencies have established a health insurance rate review program requiring insurers to provide significant documentation justifing rate increases of 10 percent or more. Information provided “that is not a trade secret or confidential commercial or financial information,” is released to the public through a federal agency Web site.     Through the program, the agencies, the Center for Consumer Information and Insurance Oversight and the Centers for Medicare & Medicaid Services, plan to ensure that rate increases of 10 percent or more, over a 12-month period, are reviewed by a state or federal government to determine whether they are unreasonable.      The Centers for Medicare & Medicaid Services will determine that the rate increase is an unreasonable one “if the increase is an excessive rate increase, an unjustified rate increase, or an unfairly discriminatory rate increase,” according to the new rules.     The rate increase is excessive if the insurance premium is unreasonably high in relation to the benefits provided. It is unjustified if the health issuer’s data is incomplete, inadequate “or otherwise does not provide a basis upon which the reasonableness of an increase may be determined.”     The rate increase is unfairly discriminatory if the increase results in premium differences between insureds within similar risk categories that: Are not permissible under applicable state law; or in the absence of a state law, do not reasonably correspond to differences in expected costs.     Click the document icon for this regulation and others.