AHIP had asked HHS to jettison the 10% increase trigger, arguing that it doesn't take into account regional market variations, medical cost drivers and other factors. Starting Sept. 1, 2012, decisions about what will trigger a rate review will be determined on the state level in coordination with HHS, according to the final rule.
In a statement, Karen Ignagni, AHIP president and CEO, said the trigger is misleading. “An arbitrary threshold for review will establish a de facto presumption of unreasonableness in what should be an objective, actuarially based evaluation,” she said.
In the meantime, some consumer advocates said the rule does not go far enough to curb excessive rate hikes or adequately inform the public about why they happen. “The health reform law relies on public disclosure of unreasonable rates to shame insurance companies into charging consumers fairer prices, but that's an empty threat if health insurers don't have to explain every assumption in the full light of day,” Carmen Balber, Washington director for advocacy group Consumer Watchdog, said in a statement.
The final rule does include a requirement that each state give the public the opportunity to weigh in when a rate review is triggered.
It's unclear in how many states HHS will intervene in this rate review process. The agency has awarded 43 states and the District of Columbia $44 million to beef up their rate review efforts, and a total of $250 million was allocated for this purpose in the reform law. Today, just 26 states and the District of Columbia have the authority to reject rate changes. Eighteen states have said they will use the grant money to push for legislation to boost regulators' authority to reject rate hikes.
But Oklahoma, for one, this month returned its $1 million federal grant to improve rate review, as part of the new governor's opposition to the reform law.
Steve Larsen, director of HHS' Center for Consumer Information and Insurance Oversight, said on a call with reporters last week that the agency fully expects “a significant majority of states will be conducting reviews.”