HHS-Rate Review Final Regulation

The regulation issued May 19, 2011 finalizes proposed rules issued in December 2010. Starting September 1, 2011, the rule requires independent experts to examine any proposed increase of 10 percent for most individual and small group health insurance plans. States will primarily be responsibile for reviewing rate increases. Most states will take on this responsibility,  but the U.S. Department of Health and Human Services (HHS) will serve in a backup role in states that don’t have the resources or authority to review rates. HHS has awarded $44 million in Affordable Care Act grants to states to help strengthen their oversight capabilities. An additional $200 million will continue to be available to states under federal health reform. Beginning September 2012, the 10 percent threshold will be replaced by state-specific thresholds that reflect the insurance and health care cost trends in each state. The final rule clarifies that HHS will work with states in developing these thresholds.

The final rule has several additions to the proposed rule issued in December 2010, including a requirement that states provide an opportunity for public input in the evaluation of rate increases subject to review.