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U.S Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today announced Affordable Care Act grant awards of $4,312,084 to Pennsylvania that will help fight unreasonable premium increases and protect consumers. Today, HHS also released a new report entitled Rate Review Works detailing how previous rate review grants are fighting premium hikes and helping make the health insurance marketplace more transparent.“We’re committed to fighting unreasonable premium increases and we know rate review works,” said Secretary Sebelius. “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 Affordable Care Act also requires insurance companies to publicly justify unreasonable premium rate increases. These provisions will bring greater transparency, accountability, and, in many cases, lower costs for families and small business owners who struggle to afford coverage.
The Affordable Care Act provides States with $250 million in Health Insurance Rate Review Grants, $48 million of which has 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 are already making a difference in Pennsylvania. The Pennsylvania Department of Insurance created a Rate Level Index Database to internally house and further analyze all rate filings. The Department used grant funds to create consumer comparison charts and post rate filings on its website.
The grants awarded today help to create a more level playing field by improving how States review proposed health insurance rates and holding insurance companies accountable for disclosing information about unjustified rate increases.
Pennsylvania is proposing to use Cycle II grant funds in the following ways:· Introduce legislation: Pennsylvania plans to acquire authority over commercial small group rates through legislation.· Expand scope of rate review: Pennsylvania plans to acquire authority over commercial small group rates by modifying Act 159.· Improve rate filing requirements: Pennsylvania proposes building the framework for an enhanced rate review process by contracting with actuarial and other expertise, and acquiring software tools to enhance internal reviews. The State will use funds to establish new rate review procedures.· Improve transparency and consumer interfaces: Pennsylvania proposes to build upon the comparison guide on its website by developing a web-based interactive tool and data repository to allow consumers to view and compare product offerings and rates to make the best decision. The website will also include additional transparency enhancements including consumer comments, summaries of approved rate filings, and the final rate determinations.· Hire new staff: Pennsylvania proposes training for current staff.· Improve IT: Pennsylvania will develop a database for market analysis and consumer assistance tools.
A summary of how each State will use the new resources can be found in the report released today.“The proposals from the States overwhelmingly demonstrate the need, and desire, for new resources and tools to hold insurance companies accountable,” said Steve Larsen, Director of the Center for Consumer Information and Insurance Oversight. “Thanks to the Affordable Care Act, States will have more of the tools they need to crack down on insurance companies that want to pass unreasonable premium hikes on to hard working families.”
Information about significant State achievements with previous rate review grants can also be found in the report.Rate review builds on other provisions in the Affordable Care Act to help make health insurance more affordable for individuals, families, and businesses. Other steps the law takes to help make insurance more affordable include:· Insurers are generally required to meet a medical loss ratio standard to spend at least 80 percent of premium dollars on health care and quality-improvement activities as opposed to overhead, advertising, and executive bonuses. Insurers that fail to meet that standard must either reduce premiums or pay rebates to consumers and employers;· Small businesses are eligible for Federal tax credits of up to 35 percent of the cost of coverage for their workers. That amount rises to 50 percent by 2014; and· In 2014, the Affordable Insurance Exchanges will use competition and transparency, including information on excessive or unjustified premium increases, to help make insurance more affordable.The Affordable Care Act includes a variety of provisions designed to promote accountability, affordability, quality, and accessibility in the health care system for all Americans, and to make the health insurance market more consumer-friendly and transparent. Some of the provisions are already in effect, including prohibitions on pre-existing condition exclusions for children; prohibitions on lifetime dollar limits in all health plans; extended access to insurance for many young adults; and an unprecedented level of transparency about health insurance through www.HealthCare.gov.
For the full Rate Review Works report, please visit: http://www.healthcare.gov/law/resources/reports/rate-review09202011a.pdfFor a fact sheet on the awards announced today, please visit: