PHSA Section 2794: Ensuring Consumers Get Value for their Dollars

1003 - PHSA Section 2794: Ensuring Consumers Get Value for their Dollars

Summary

Amended by section 10101 of the Manager’s Amendment. Beginning with the 2010 plan year, working with States, HHS will establish a process for the annual review of unreasonable increases in health insurance premiums, including issuers’ submission to HHS of justification for unreasonable premium increases prior to implementation and public disclosure of this information by issuers and HHS. HHS will award grants to States during a 5-year period beginning with FY 2010 to support the rate review process. Appropriates $250M.

Separately, establishes Medical Reimbursement Data Centers for developing fee schedules for medical services, making healthcare cost information publicly available and other tasks.

Last updated: (October 31, 2016)

Implementation Status

Summary

Statutory Text

This provision is in effect. See a CCIIO fact sheet about its implementation as well as a CCIIO homepage with implementation details.

Rulemaking includes a May 23, 2011, final rule establishing a rate review program under which all rate increases that meet or exceed a specified threshold – 10 percent from September 2011-August 2012 – are reviewed by a State or CMS to determine whether they are unreasonable, among other provisions.

A September 6, 2011, final rule amended this rule’s definitions of “individual market” and “small group market,” as they apply for rate review purposes, to include coverage sold to individuals and small groups through associations.

On March 30, 2012, CCIIO issued guidance to States regarding the process for submitting proposals for State-specific rate review thresholds effective September 1, 2012 through August 31, 2013.

On February 27, 2013, CCIIO published a final rule on market rules and rate review, including several amendments to rate review standards, such as finalizing a requirement that plans report all rate increases and not only those above the threshold; the rule also revises the timeline for States to propose state-specific rate review thresholds. In conjunction with the release, HHS issued a report regarding health insurance premium increases in the individual market since the ACA passed.

On May 3, 2013, CCIIO posted an updated fact sheet on State Effective Rate Review Programs noting that as of May 1, 44 States, the District of Columbia, Guam, Puerto Rico and the U. S. Virgin Islands have “effective rate review in at least one insurance market.” On May 8, HHS announced a third round of funding – roughly $87 million – open to States, the District of Columbia, and territories to enhance their health insurance rate review programs. Details on the funding opportunity are available here. Applications are due by 4 p.m. EDT on August 1, 2013. Also see a May 13 Paperwork Reduction Act Notice regarding information collection requirements for the three rate review and pricing transparency reporting funding cycles.

On June 6, 2013, CCIIO released FAQs related to the Funding Opportunity Announcement – announced on May 8 – “Grants to States to Support Health Insurance Rate Review and Increase Transparency in Health Care Pricing, Cycle III of the Rate Review Grant Program.”

On July 1, 2013, the Government Accountability Office released a report (also see highlights) examining the Exchange and rate review grant awards that HHS has made to states under ACA authority, finding that HHS has awarded nearly $3.7B in Exchange grants to 49 states and the District of Columbia as of March 27, 2013. GAO indicates that, with respect to monitoring, HHS has made “limited” use of site visits, although HHS conducts other monitoring, and HHS officials say they ”have not identified any misuse of grant funds or compliance issues to date.”

On September 12, 2013, HHS released a report (also see an HHS release) finding that insurer rate increases subject to rate review resulted in lower-than-proposed hikes by a margin of 12% and 19% in the individual and small group markets, respectively. Extrapolating from those data, HHS attributes $311M in individual market and $866M in small group market premium savings in 2012 to rate review provisions. Also see a Center for Consumer Information and Insurance Oversight map on states’ rate review grants.

On April 2, 2014, CMS published an information collection notice regarding the reinstatement of previously approved rate increase disclosure and review reporting requirements to canceled plans subject to the Administration’s transitional policy. Such plans will use the earlier version of the form instead of a template and system now in use for single risk pool plans, from which canceled plans are exempt. Comments are due by May 2, 2014.

On June 2, 2014, CMS issued a notice (see #2 on p. 2) seeking comments by August 1, 2014, on a proposed revised information collection for rate review grant reporting requirements for states (cycles I-IV). See the Paperwork Reduction Act package with accompanying documents here.On May 29, CCIIO posted a grant opportunity with $40 million in total funding (57 anticipated awards expected to range from about $720,000 to $5 million apiece) for states governments under cycle IV of the rate review program. Additional details are available here; the deadline is July 21, 2014

On July 16, HHS issued letters (Virgin Islands, Northern Mariana Islands, Guam, American Samoa, Puerto Rico) indicating that health insurers issuing coverage in U.S. territories are exempt from certain ACA market reforms since they are not considered “states

On August 25, CMS published a notice requesting comments on a revision to a currently approved information collection (see #2 on p. 2) on state grant reporting requirements for Effective Rate Review Programs. Comments are due by September 24, 2014.

On Sept. 19, HHS announced ACA-funded Health Insurance Rate Review Grants that the agency says will help states to “enhance their review of health insurance rate increases, educate consumers, help hold insurance companies accountable and to scrutinize medical pricing data.” Funded states in Cycle IV include: AZ, AR, CA, DE, HI, IN, KY, ME, MD, MA, MI, MN, NV, NH, NJ, OR, RI, UT, VT, WA and WI (see a map here capturing multiple rounds of Federal rate review funding by state). HHS also released the third annual Rate Review Annual Report based on 2013 data from rate review grantee states.

On Dec. 19, CCIIO released a draft letter to health plan issuers in Federally Facilitated Marketplaces presenting key dates for 2016 certification, along with anticipated details on rate review, inclusion of essential community providers, and parameters for identifying discriminatory benefit design, among other policies. Comments on the draft letter were due by Jan. 12, 2015. On Jan. 6, 2015, CCIIO posted slides on plan year 2016 updates to the prescription drug template for Federal Marketplace Qualified Health Plans (QHPs). Also see slides on chapter 1 of the draft issuer letter to Federal Marketplace QHPs (including 2016 certification timeline).

On Dec. 30 CMS announced a new website through which consumers can access plans’ submitted and approved rate filings for the 2014 and 2015 benefit years.

2015

On Jan. 30, 2015 CMS posted a Paperwork Reduction Act Package containing forms and instructions for medical loss ratio reporting for the 2014 reporting year.

On Feb. 20, CMS finalized the wide-ranging final 2016 Notice of Benefit and Payment Parameters rule that addresses – among other topics – ACA premium stabilization, Marketplace open enrollment and user fee, rate review, essential health benefits, prescription drug coverage and other issues generally affecting Qualified Health Plans (QHPs) for the 2016 benefit year. Also see a fact sheet. Additionally, on Feb. 20, CCIIO finalized the 2016 letter to health insurance issuers in the Federally Facilitated Marketplace, which addresses QHP certification timelines, benefit design, essential community providers, network adequacy and other issues.

On May 13, CCIIO released a Q&A on uniform rate review timelines in states operating State-Based Marketplaces.

On June 1, CMS posted information about health insurance rates for plans both inside and outside of Marketplaces that have proposed a rate increase of 10% or more. On June 24, the House Ways and Means Oversight Subcommittee held a hearing on 2016 rate requests and cost drivers.

On July 21, CCIIO Director and Marketplace CEO wrote to state Insurance Commissioners urging them to consider key factors before finalizing 2016 QHP rates.

In December, CMS released its annual report on the ACA rate review program, highlighting results for 2014 and 2015.

2016

On Feb. 19, CMS posted a Paperwork Reduction Act packageon ACA rate increase disclosure and review reporting requirements.

On Apr. 20, HHS, DOL, and the Treasury issued joint FAQs regarding implementation of ACA market reform provisions, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), and the Women’s Health and Cancer Rights Act of 1998 (WHCRA). Specific market reforms made by the ACA, including emergency services protections, coverage of preventive services, prohibition on rescissions, coverage of individuals participating in approved clinical trials, and limitations on cost sharing, are all addressed.

On June 17, CMS posted a Paperwork Reduction Act (PRA) package with materials addressing plans’ rate increase disclosure and rate review reporting requirements. An accompanying PRA package addresses periodic reporting requirements for states’ rate review grants.

On Sept. 26, CCIIO posted guidance on the “manner in which an issuer must ‘prominently post’ the required rate filing information and its Final Justification for implementing a rate increase deemed to be ‘unreasonable’ and clarifies the type of information that an issuer must include in its Final Justification.”

On Oct. 7, CMS sought comments (due: Nov. 7) on reporting requirements for states receiving unobligated ACA rate review funding to plan and implement insurance market reforms. The information collection outlines periodic, annual, and final reporting obligations, along with anticipated burden estimates.

On Oct. 24, at the bottom of the page here (ZIP file), CCIIO posted the Public Use Files for 2017 single risk pool rate filings, including rate review data.

On Nov. 1, CMS announced over $25 million in unobligated ACA rate review funding to support 22 states and DC in overseeing insurer compliance with market reforms and enforcing consumer protections.

On Nov. 10, CMS posted a draft bulletin on the timing and submission of rate filing justifications for the 2017 filing year. It applies to QHP and non-QHP single risk pool coverage.

On Dec. 16, CCIIO posted guidance on age-rating curves and state reporting and issued the 2018 Actuarial Value Calculator (Excel file) and methodology explainer.

2017

On Feb. 17, CCIIO posted a draft bulletin with revised timing of submission and posting of rate filing justifications for the 2017 filing year for single risk pool coverage and revised timing of submission for QHP certification application.

On April 13, CCIIO released revised guidance on the unified rate review timeline.

On July 18, CCIIO said that starting in plan year 2018, it will defer to states with Effective Rate Review programs and no longer conduct outlier analysis of rates as a component of QHP certification.

2018

On Aug. 20, CMS awarded $8.6 million in remaining Affordable Care Act (ACA) State Rate Review Grant funding to 30 states plus DC to enhance their respective state health insurance markets. A breakdown of the awards, by state, is available here.

Statutory Text

Implementation Status

Summary

‘‘SEC. 2794 [42 U.S.C. 300gg–94]. ENSURING THAT CONSUMERS GET
VALUE FOR THEIR DOLLARS.
‘‘(a) INITIAL PREMIUM REVIEW PROCESS.—
‘‘(1) IN GENERAL.—The Secretary, in conjunction with
States, shall establish a process for the annual review, beginning
with the 2010 plan year and subject to subsection
(b)(2)(A), of unreasonable increases in premiums for health insurance
coverage.
‘‘(2) JUSTIFICATION AND DISCLOSURE.—The process established
under paragraph (1) shall require health insurance
issuers to submit to the Secretary and the relevant State a justification
for an unreasonable premium increase prior to the
implementation of the increase. Such issuers shall prominently
post such information on their Internet websites. The Secretary
shall ensure the public disclosure of information on such
increases and justifications for all health insurance issuers.
‘‘(b) CONTINUING PREMIUM REVIEW PROCESS.—
‘‘(1) INFORMING SECRETARY OF PREMIUM INCREASE PATTERNS.—As
a condition of receiving a grant under subsection
(c)(1), a State, through its Commissioner of Insurance, shall—
‘‘(A) provide the Secretary with information about
trends in premium increases in health insurance coverage
in premium rating areas in the State; and
‘‘(B) make recommendations, as appropriate, to the
State Exchange about whether particular health insurance
issuers should be excluded from participation in the Exchange
based on a pattern or practice of excessive or unjustified
premium increases.
‘‘(2) MONITORING BY SECRETARY OF PREMIUM INCREASES.—
‘‘(A) IN GENERAL.—Beginning with plan years beginning
in 2014, the Secretary, in conjunction with the States
and consistent with the provisions of subsection (a)(2),
shall monitor premium increases of health insurance coverage
offered through an Exchange and outside of an Exchange.
‘‘(B) CONSIDERATION IN OPENING EXCHANGE.—In determining
under section 1312(f)(2)(B) of the Patient Protection
and Affordable Care Act whether to offer qualified
health plans in the large group market through an Exchange,
the State shall take into account any excess of premium
growth outside of the Exchange as compared to the
rate of such growth inside the Exchange.
‘‘(c) GRANTS IN SUPPORT OF PROCESS.—
‘‘(1) PREMIUM REVIEW GRANTS DURING 2010 THROUGH 2014.—
The Secretary shall carry out a program to award grants to
States during the 5-year period beginning with fiscal year 2010
to assist such States in carrying out subsection (a), including—
‘‘(A) in reviewing and, if appropriate under State law,
approving premium increases for health insurance coverage;

‘‘(B) in providing information and recommendations to
the Secretary under subsection (b)(1); and
‘‘(C) øAs added by section 10101(i)(1)(C)¿ in establishing
centers (consistent with subsection (d)) at academic
or other nonprofit institutions to collect medical reimbursement
information from health insurance issuers, to analyze
and organize such information, and to make such information
available to such issuers, health care providers,
health researchers, health care policy makers, and the
general public.
‘‘(2) FUNDING.—
‘‘(A) IN GENERAL.—Out of all funds in the Treasury not
otherwise appropriated, there are appropriated to the Secretary
$250,000,000, to be available for expenditure for
grants under paragraph (1) and subparagraph (B).
‘‘(B) FURTHER AVAILABILITY FOR INSURANCE REFORM
AND CONSUMER PROTECTION.—If the amounts appropriated
under subparagraph (A) are not fully obligated under
grants under paragraph (1) by the end of fiscal year 2014,
any remaining funds shall remain available to the Secretary
for grants to States for planning and implementing
the insurance reforms and consumer protections under
part A.
‘‘(C) ALLOCATION.—The Secretary shall establish a formula
for determining the amount of any grant to a State
under this subsection. Under such formula—
‘‘(i) the Secretary shall consider the number of
plans of health insurance coverage offered in each
State and the population of the State; and
‘‘(ii) no State qualifying for a grant under paragraph
(1) shall receive less than $1,000,000, or more
than $5,000,000 for a grant year.
‘‘(d) MEDICAL REIMBURSEMENT DATA CENTERS.—[As added by
section 10101(i)(2)]
‘‘(1) FUNCTIONS.—A center established under subsection
(c)(1)(C) shall—
‘‘(A) develop fee schedules and other database tools
that fairly and accurately reflect market rates for medical
services and the geographic differences in those rates;
‘‘(B) use the best available statistical methods and
data processing technology to develop such fee schedules
and other database tools;
‘‘(C) regularly update such fee schedules and other
database tools to reflect changes in charges for medical
services;
‘‘(D) make health care cost information readily available
to the public through an Internet website that allows
consumers to understand the amounts that health care
providers in their area charge for particular medical services;
and
‘‘(E) regularly publish information concerning the statistical
methodologies used by the center to analyze health
charge data and make such data available to researchers
and policy makers.
‘‘(2) CONFLICTS OF INTEREST.—A center established under
subsection (c)(1)(C) shall adopt by-laws that ensures that the
center (and all members of the governing board of the center)
is independent and free from all conflicts of interest. Such bylaws
shall ensure that the center is not controlled or influenced
by, and does not have any corporate relation to, any individual
or entity that may make or receive payments for health care
services based on the center’s analysis of health care costs.
‘‘(3) RULE OF CONSTRUCTION.—Nothing in this subsection
shall be construed to permit a center established under subsection
(c)(1)(C) to compel health insurance issuers to provide
data to the center.’’.

1003 - PHSA Section 2794: Ensuring Consumers Get Value for their Dollars

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