HHS Call for Comments on Regs: EQUAL Responds

HHS Calls for Public Comment
EQUAL TO HHS: DEFEND CONSUMERS FROM INSURANCE INDUSTRY ABUSES

Equal responded to a call from the Administration to comment on the new law that health insurers must spend 80 – 85% of premiums on patient care, using the “medical loss ratio.”  Ellen R. Shaffer and Robert Mason said that:

  1. 1. The Medical Loss Ratio is an imperfect measure.
  2. 2.  The insurance industry should be constrained from using the loophole that defines “activities that improve health care quality.”

“The public should be encouraged to document and report efforts by insurance companies to drum up and benefit from flimsy programs that masquerade as clinical treatments.  These programs should be properly counted as the administrative expenses that they are.  Otherwise, a proliferation of such programs, if regarded as clinical care, would have the exact opposite of the intended effect of the measure: it would cause health care expenditures to balloon, and dilute value for consumers.”

EQUAL Comments on MLR (PDF)

Request for Comments Regarding Section 2718 of the Public Health Service Act (Medical Loss Ratios)

DEPARTMENT OF THE TREASURY

Internal Revenue Service

DEPARTMENT OF LABOR

Employee Benefits Security Administration

DEPARTMENT OF HEALTH AND HUMAN SERVICE

Office of the Secretary

B. Public Reporting of the Ratio of Incurred Claims to Earned Premiums (Medical Loss Ratio) for Individual and Group Coverage

PPACA sections 1001 and 10101 added Section 2718 of the PHS Act, which, among other provisions, requires health insurance issuers offering individual or group coverage to submit annual reports to the Secretary on the percentages of premiums that the coverage spends on reimbursement for clinical services and activities that improve health care quality, and to provide rebates to enrollees if this spending does not meet minimum standards for a given plan year.

Specifically, Section 2718(a) of the PHS Act requires health insurance issuers offering group or individual coverage to submit a report to the Secretary for each plan year, concerning the ratio of the incurred loss (or incurred claims) plus the loss adjustment expense (or change in contract reserves) to earned premiums (also known as the medical loss ratio (MLR)).  Section 2718(a) requires that each report include the percentage of total premium revenue — after accounting for collections or receipts for risk adjustment and risk corridors and payments of reinsurance — that the coverage spends:

1. on reimbursement for clinical services provided to enrollees;
2. for activities that improve health care quality; and
3. on all other non-claims costs, including an explanation of the nature of these costs, and excluding Federal and State taxes and licensing or regulatory fees.

Section 2718(a) also directs the Secretary to make these reports available to the public on the Internet website of HHS.

http://healthreform.gov/newsroom/section2718.html

Request for Comments Regarding Section 2794 of the Public Health Service Act

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

45 CFR Parts 146 and 148

Premium Review Process; Request for Comments Regarding Section 2794 of the Public Health Service Act

AGENCY:  Office of the Secretary, HHS.

ACTION:  Notice; request for information.

II. Solicitation of Comments

A. Information Regarding Regulatory Guidance

The Department is inviting public comment to aid in the development of regulations regarding Section 2794 of the PHS Act, and is especially interested in the perspectives of researchers, policy analysts, health insurance issuers, and States.  To assist interested parties in responding, this request for comments describes specific areas in which the Department is particularly interested.

This request for comments identifies a wide range of issues that are of interest to the Department. Commenters should use the questions below to assist in providing the Department with useful information relating to the development of regulations regarding Section 2794 of the PHS Act.  However, it is not necessary for commenters to address every question.  Individuals, groups, and organizations interested in providing information relating to one or more of the topics discussed herein may do so at their discretion by following the above mentioned instructions.

Specific Areas in which the Department is interested include the following:

  1. Rate Filings and Review of Rate IncreasesThe Act requires the Secretary, in conjunction with States, to establish a process for the annual review of unreasonable
    increases in health insurance premiums. A justification for an unreasonable premium increase is also required.

    1. To what extent do States currently have processes in place to review premium rates and rate increases?
      1. What kinds of methodologies are used by States to determine whether or not to approve or modify a rate or a rate increase?
        What are the pros and cons of these differing methodologies?
      2. Are special considerations needed for certain kinds of plans (for example, HMOs, high deductible health plans, new policies,
        and closed blocks of business)? If so, what special considerations are typically employed and under what circumstances?
    2. Where applicable, do health insurance issuers currently provide actuarial memorandums and supporting documentation relating
      to premium rate calculations, such as trend assumptions, for all premium rates and rate increases that are submitted, and/or
      for all premium rates and rate increases that are reviewed?

      1. How is medical trend typically calculated?
      2. Are specific exhibits, worksheets or other documents typically required?  If so, are these documents generally submitted
        to the State Insurance Department directly, and if so, in what format?
      3. To what extent do issuers use the following categories to develop justifications for rate increases: cost-sharing, enrollee
        population including health risk status, utilization increases, provider prices, administrative costs, medical loss ratios,
        reserves, and surplus levels?  Are there other factors that are considered?
    3. What level(s) of aggregation (for example, by policy form level, by plan type, by line of business, or by company) are
      generally used for rate filings, rate approvals, and any corrective actions?  What are the pros and cons associated with each level of aggregation in these various contexts?
    4. What requirements do States currently have relating to medical trend and rating calculations?  What are the pros
      and cons of these different requirements, and what additional requirements could potentially be set?

      1. Do States generally allow enrollees under the same policy form to be further subdivided for purposes of calculating medical
        trends and rates?
      2. Do States generally allow enrollees under different policy forms to be grouped together for these calculations, and if
        so, how?
  2. Defining Unreasonable Premium Rate IncreasesThe Act provides that the initial and continuing rate review process under Section 2794 is only to be undertaken for unreasonable
    premium rate increases.

    1. In States that currently have rate review processes, are all rates or rate increases generally reviewed?  If so,
      for what markets and/or products?  If not, what criteria do these States typically use when determining which rates or
      rate increases will be reviewed?  To what extent do States require that these reviews take place before the proposed
      rate increases can be implemented?
    2. To what extent have States developed definitions of what constitutes a premium rate increase warranting review?
  3. Public DisclosureThe Act requires that health insurance issuers prominently post the justification for an unreasonable premium increase
    on their Internet websites prior to implementation of the increase.

    1. To what extent is information on premium rates and premium rate increases, and related justifications, currently made
      available to the public?

      1. To what extent are annual summaries of premium rate increases currently made available to the public on State or consumer
        websites, and/or made available by request?  Where available, to what extent is this information generally provided by
        policy form, type of product, line of business, or some other grouping?
      2. To what extent are rate filings with actuarial justification and supporting documentation generally made available to
        the public? In what format(s) are rate filings currently made available to the public? What format(s) would be most useful
        to the public?
      3. What kinds of supporting documentation are necessary for consumers to interpret these kinds of information?
    2. What kinds of information relating to justification for an unreasonable premium increase could potentially be made available?
  4. Exclusion from ExchangeFor plan years beginning in 2014, States receiving grants in support of the rate review process must make recommendations,
    as appropriate, to the State Exchange about whether particular insurance issuers should be excluded from participation in
    the Exchange based on a pattern or practice of excessive or unjustified premium increases.

    1. To what extent have States developed definitions of what constitutes an excessive or unjustified premium rate increase
      and/or a pattern or practice of such increases?  How could a pattern or practice of excessive unjustified premium increases
      be defined in this context, and what are some of the pros and cons of the various approaches that are available?
    2. What criteria could be established to determine whether insurers have engaged in a pattern or practice of excessive or
      unjustified premium increases?
  5. Grant AllocationThe Act directs the Secretary to allocate $250 million in grant money to States to carry out the rate review process.
    1. What factors could be considered in grant allocation?
    2. What weighting could be given to different factors and why?

http://healthreform.gov/newsroom/section2794.html

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