On Monday, HHS announced that it has deemed a proposed 12% premium increase for small-business health plans by Everence Insurance in Pennsylvania to be excessive, The Hill's "Healthwatch" reports.
The announcement marks the first time the agency exercised its new rate-review authority under the federal health reform law.
Background
Under the overhaul, the department has the authority to review rate increases and determine whether they are warranted (Baker, "Healthwatch," The Hill, 11/21).
HHS issued regulations under the reform law that require health insurers to disclose and justify any premium increases of 10% or more. The rules stipulate that states must either review rate increases of 10% or more beginning in July or allow HHS to assess them (California Healthline, 9/21).
Although HHS does not have the power to force rate changes, it can require insurers to publicly justify their rates ("Healthwatch," The Hill, 11/21).
Use of Rate-Review Authority
HHS said that a 12% rate hike for small businesses proposed by Everence is "excessive" because it was calculated based on national data, rather than state data.
HHS requested that Everence revoke the proposed rate increase or issue refunds to consumers who already have paid. If Everence denies that request, it will have 10 days to offer public justification for the rate increase (Norman, CQ HealthBeat, 11/21).
Everence officials stood by the proposed increase and said that they calculated the rates based on a two-year experience period, rather than the one-year period used by HHS.
Judy Martin Godshalk, an Everence spokesperson, said the company has "no plans to make any changes" but is open to a discussion with federal officials (Levey, Los Angeles Times, 11/22).
Although Everence is the first company whose proposed rates have been deemed excessive, HHS currently is reviewing 35 other increases of more than 10%. Another 77 rate hikes of more than 10% are being reviewed by state officials, according to HHS (Los Angeles Times, 11/22).