HHS Issues Final Rule On Insurance Reforms, Rate Review Program

The Department of Health and Human Services (HHS) has issued a final rule that implements provisions of the Patient Protection and Affordable Care Act (ACA) designed to protect consumers from insurance company abuses. The final rule was published in the February 27 Federal Register.

The final rule implements provisions related to fair health insurance premiums, guaranteed availability, guaranteed renewability, single risk pools, and catastrophic plans. Proposed regulations were issued in November 2012. Beginning in 2014, non-grandfathered health plans will be prohibited from denying coverage to any individual because of a preexisting condition, and from charging individuals and small employers higher premiums based on health status or gender. In addition, health insurance issuers will no longer be able to segment enrollees into separate rating pools in order to charge high-risk individuals more than low-risk individuals.

The final rule does the following:

1. provides that health insurance issuers may vary the premium rate for health insurance coverage in the individual and small group markets only based on family size, geography, and age and tobacco use within limits;

2. directs health insurance issuers to offer coverage to and accept every employer or individual who applies for coverage in the group and individual market, subject to certain exceptions;

3. directs health insurance issuers to renew or continue in force coverage in the group and individual market, subject to certain exceptions;

4. codifies the requirement that issuers maintain a single risk pool for the individual market and a single risk pool for the small group market (unless a state decides to merge the markets into a single risk pool); and

5. outlines standards for enrollment in catastrophic plans for young adults and people who cannot otherwise afford health insurance.

Rate review. This final rule also amends the standards for health insurance issuers and states regarding reporting, utilization, and collection of data under the federal rate review program, and revises the timeline for states to propose state-specific thresholds for review and approval by the Centers for Medicare and Medicaid Services (CMS). Health insurance issuers will be required to submit data relating to proposed rate increases in a standardized format, as specified in the final rule. This will ensure that the HHS monitors the premium increases of health insurance coverage offered through an exchange, and outside of an exchange. It also increases transparency by directing insurance companies in every state to report on all rate review requests.

For more information, contact, Jacob Ackerman at (410) 786-1565, concerning the health insurance market rules; or Douglas Pennington at (410) 786-1553, concerning rate review.

Visit our News Library to read more news stories.