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Hospital Value Based Purchasing & Dual-Eligibles Demonstrations

Last week, CMS released the final rule implementing a requirement in health reform that directs the Secretary of HHS to establish a process for the annual review of unreasonable increases in premiums for health insurance coverage. Per a provision in PPACA, premiums that would increase more than ten percent would be subject to an automatic review by either the state insurance regulator or by CMS. States that are determined by CMS to have a comprehensive rate review program will continue to complete reviews of the proposed increase and report their decision to CMS for public posting. If a state’s review program does not meet the CMS criteria, the review will be conducted by CMS. The final rule applies to small group and individual commercial plans.

Health insurers will be required to submit a three part application that contains justification for an unreasonable rate increase and post information on the plan’s internet website. The first two parts of the application are required for all plans, while the third part is only required if requested by CMS. The third part contains rate information, which many plans consider proprietary, confidential or a trade secret. The final rule adopts the confidentiality approach taken in the proposed rule, however, CMS did indicate in their response to comments that they believe it would be difficult for an issuer to assert that rate related information is confidential or protected from disclosure under Federal law. CMS completed a review of state approaches before releasing the final rule and determined some states, a total of twelve, make all parts of a rate filing public. Therefore, CMS believes that issuers will have a hard time proving their rate information should not be subject to disclosure.

Additionally, while the final rule requires denial of a rate determined to be unreasonable, nothing in the regulation mentions the adequacy of the proposed rates. CMS did acknowledge through comments that inadequate rate increases can be problematic and lead to larger increases in subsequent years. However, they indicated that the section of the Public Health Service act being amended by health reform is not concerned with rate increases that are too low, and declined to include adequacy as a prong of the unreasonableness test that CMS will use when reviewing rates. CMS did indicate that nothing in the regulation prevents or prohibits a state from considering adequacy as a part of their review.

We understand the fine balance CMS is trying to reach between ensuring consumer access to health insurance and health plan solvency. However, it is unfortunate that CMS did not take a stronger position on protecting health plan’s confidential rate and other proprietary data, as release of such information could put plans at a competitive disadvantage and negatively impact consumers. Further, it is disappointing that CMS did not take the opportunity to require adequacy to be taken under consideration during the rate review process; we believe CMS missed an opening to help stabilize the marketplace and ensure consumer choice.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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