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HHS grants $109M to help keep insurance premium hikes reasonable

The Department of Health and Human Services (HHS) granted $109 million Tuesday for states and the District of Columbia to fund reviews of health insurance rate hikes.

"We're committed to fighting unreasonable premium increases and we know rate review works," said Kathleen Sebelius, HHS secretary, in a statement. "States continue to have the primary responsibility for reviewing insurance rates and these grants give them more resources to hold insurance companies accountable."

As of September 1, 2011, the Affordable Care Act requires health insurers seeking to increase their rates by 10 percent or more in the individual and small group market to submit their request to experts to determine whether the rates are unreasonable. The ACA also requires insurance companies to publicly justify unreasonable premium rate increases. The goal of these provisions is to bring greater transparency and accountability to the process.

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HHS also released a new report Tuesday entitled "Rate Review Works," detailing how previous rate review grants are fighting premium hikes and helping make the health insurance marketplace more transparent.

The ACA provides states with $250 million in Health Insurance Rate Review Grants, $48 million of which have previously been awarded to 42 states, the District of Columbia and five territories. As outlined in the new report, these grants and other state rate review efforts include:

• In July 2011, Oregon forced an insurer to lower its request for a rate hike by nearly 10 percent. This put money back in the pockets of approximately 60,000 consumers.
• Over the past year, at the direction of the State Insurance Commissioner, Arkansas has been negotiating with insurance companies requesting rate increases greater than 10 percent on their individual health insurance products. The commissioner recently negotiated a lower rate affecting approximately 90,000 policyholders.

• Last year, thanks to new rate review authority, North Carolina saved beneficiaries $4.5 million by reducing a rate increase request from the state's largest insurance company.

The previous grants also contributed to nine states passing legislation to strengthen their ability to review and prevent excessive premium increases.

States are proposing to use the next cycle of grant funds in the following ways:

• Introduce legislation: Seven states are introducing legislation to strengthen their authority to review and/or publicize proposed rate increases.
• Expand scope of rate review: Nineteen states and the District of Columbia are proposing to use grant funds to expand the scope of rate review, for example, by reviewing rates in new markets or by reviewing rates for new products.
• Improve rate filing requirements: Twenty-eight states and the District of Columbia are proposing to use grant funds to improve rate filing requirements, such as requiring insurers to provide additional information on administrative costs and requiring insurers to file rate increases in a standardized format.

• Improve transparency and consumer interfaces: Twenty-eight states and the District of Columbia are proposing to use grant funds to improve consumer interfaces, such as developing a rate review home page at the Department of Insurance website and providing opportunities for consumers to comment on proposed rate hikes via the website.