Using a new power under the Affordable Care Act (ACA) for the first time, the U.S. Dept. of Health and Human Services (HHS) has now ordered an insurance company to lower its rates.
Since September 2011, HHS has been flagging any insurer that raises premiums on small businesses and individuals by 10 percent or more. Then HHS rules on whether the increases were justifiable and if not, the insurer must reduce them within 10 days, or else HHS can launch enforcement tools. The dragnet has yielded its first result.
Everence Insurance‘s premium hike (11.6 percent) on 4,800 covered lives at small businesses in Pennsylvania was “excessive,” HHS says here, because:
After reviewing the rate, independent experts determined the choice of assumptions the company based its rate increase on reflected national data rather than reliable and available state data. These assumptions resulted in an unreasonably high premium in relation to the benefits provided..
“We have called on this insurer to immediately rescind the rate, issue refunds to consumers or publicly explain their refusal to do so,” said Steve Larsen, director of the HHS Center for Consumer Information and Insurance Oversight.
Learn more about rate reviews. Rate review does not apply to grandfathered plans, and the acceptable rate of inflation will be allowed to vary from state to state.
Starting September 2011, health insurance companies must inform individual or small group policyholders of premium increases of 10 percent or more.
The same ACA provisions require insurers to give small businesses a written explanation of the increase and the factors contributing to it, the HHS official for consumer information and insurance oversight says here.
The Indiana-based financial services company has 10 days to change its rate or post an explanation on its website.