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Health Care Reform Update
On May 19, 2011, the Department of Health and Human Services (HHS), issued final regulation to implement rate review regulation for health insurance renewals on individual and small group policies. This rate review provision has been brought about as a requirement under Section 1003 of the Affordable Care Act. This section of the Act mandates the Secretary of the Department of Health and Human Services, in conjunction with the States, establish a process for the annual review of “unreasonable increases in premiums for health insurance coverage.”
What this means to you:
Effective September 1, 2011 justification for renewal rate increases of 10% or more must be
disclosed by the insuring carrier. The stated justifications for the increase will then be reviewed by independent experts to guarantee the increase is reasonable and warranted. These experts are charged to closely examine recent trends and flag instances when they determine increases to be unjustified.
Insurance companies will be required to publish their justifications for these increases on their websites. The HHS will also publish these justifications on their web site: www.hhs.gov. The bill requires these justifications be made available to consumers in a simple and easy to understand format. As such, the HHS will regulate these publications. Please see the included document CMS‐10379. This is the proposed template released by the HHS for these consumer disclosures. This new requirement applies to all non‐grandfathered individual or small group plans. A small group is defined as an employer with 50 or fewer employees.
Effective September 1, 2012 each State will mandate a State‐specific threshold based on data on health care cost trends particular to that State. The HHS will work with States in developing these thresholds. This new level of transparency to health insurance rate increases is intended to make sure rates are based on reasonable cost assumptions regarding health care cost trends and utilization.
For more information please visit the HHS New Release on this topic at: http://www.hhs.gov/news/press/2011pres/05/20110519a.html
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