[Federal Register Volume 75, Number 71 (Wednesday, April 14, 2010)]
[Proposed Rules]
[Pages 19335-19338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-8600]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Secretary
45 CFR Parts 146 and 148
Premium Review Process; Request for Comments Regarding Section
2794 of the Public Health Service Act
AGENCY: Office of the Secretary, HHS.
ACTION: Request for information.
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SUMMARY: This document is a request for comments regarding Section 1003
of the Patient Protection and Affordable Care Act (PPACA), Pub. L. 111-
148, which added Section 2794 to the Public Health Service Act (the PHS
Act). Section 2794 of the PHS Act requires the Secretary to work with
States to establish an annual review of unreasonable rate increases, to
monitor premium increases and to award grants to States to carry out
their rate review process. The Department of Health and Human Services
(HHS) invites public comments in advance of future rulemaking.
DATES: Submit written or electronic comments by May 14, 2010.
ADDRESSES: Written comments, identified by DHHS-2010-PRR, may be
submitted to the Department of HHS by one of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Written comments (one original and two copies) may
be mailed to: Department of Health and Human Services, Attention: DHHS-
2010-PRR, Hubert H. Humphrey Building, Room 445-G, 200 Independence
Avenue, SW., Washington, DC 20201.
Hand or courier delivery: Comments may be delivered to
Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201. Because access to the interior of the HHH
Building is not readily available to persons without Federal Government
identification, commenters are encouraged to leave their comments in
the DHHS-2010-PRR drop box located in the main lobby of the building. A
stamp-in clock is available for persons wishing to retain proof of
filing by stamping in and retaining an extra copy of the comments being
filed.
Inspection of Public Comments. All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all electronic
comments received before the close of the comment period on the
following public Web site as soon as possible after they have been
received: http://www.regulations.gov. Follow the search instructions on
that Web site to view public comments.
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Comments received timely will be available for public inspection as
they are received, generally beginning approximately 3 weeks after
publication of a document, at 200 Independence Avenue, SW., Washington,
DC 20201, Monday through Friday of each week from 8:30 a.m. to 4 p.m.
To schedule an appointment to view public comments, call 202-690-5480.
FOR FURTHER INFORMATION CONTACT: Sharon Arnold, Centers for Medicare
and Medicaid Services, Department of Health and Human Services, at
(202) 690-5480. Customer Service Information: Individuals interested in
obtaining information about the Patient Protection and Affordable Care
Act may visit the Department of Health and Human Services' Web site
(http://www.healthreform.gov).
SUPPLEMENTARY INFORMATION:
I. Background
Section 1003 of the Patient Protection and Affordable Care Act
(PPACA), Public Law 111-148, enacted on March 23, 2010, added Section
2794 of the Public Health Service Act (PHS Act). In 1996, Congress
enacted the Health Insurance Portability and Accountability Act of 1996
(HIPAA), which added title XXVII to the PHS Act, and parallel
provisions to the Employee Retirement Income Security Act of 1974
(ERISA), and the Internal Revenue Code of 1986. These amendments
provided for, among other things, improved portability and continuity
of coverage with respect to health insurance coverage in the group and
individual insurance markets, and group health plan coverage provided
in connection with employment. Title XXVII of the PHS Act is codified
at 42 U.S.C. 300gg, et seq. PPACA expanded Title XXVII of the PHS Act,
redesignated several sections, and created new requirements affecting
the individual and group markets. In particular, among other
provisions, Section 2794 requires health insurance issuers offering
individual or group coverage to submit to the Secretary and the
relevant State a justification for an unreasonable premium increases.
A. Initial Premium Review Process, Public Reporting, and Justification
of Unreasonable Premium Increases for Individual and Group Coverage
Section 2794(a)(1) requires the Secretary, in conjunction with
States, to establish a process for the annual review, beginning with
the 2010 plan year, of unreasonable increases in premiums for health
insurance coverage. Additionally, Section 2794(a)(2) provides that this
process 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, and
prominently post this information on their Internet Web sites. Section
2794(a)(2) also requires the Secretary to ensure the public disclosure
of information relating to these increases and justifications for all
health insurance issuers.
B. Continuing Premium Review Process
For plan years beginning in 2014, Section 2794(b)(2)(A) requires
the Secretary, in conjunction with States to monitor premium increases
of health insurance coverage offered through an Exchange and outside of
an Exchange, consistent with the provisions of Section 2794(a)(2). (In
this context, the terms ``State Exchange'' and ``Exchange'' refer to
the State health insurance exchanges established under PPACA).
Section 2794(b)(1) also requires that, as a condition of receiving
a grant from the Secretary to assist in carrying out the premium review
process, States shall provide the Secretary with information about
trends in premium increases in health insurance coverage in premium
rating areas in the State; and make recommendations 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.
Additionally, Section 2794(b)(2)(B) requires States to take into
account any excess of premium growth outside of the Exchange, as
compared to the rate of premium growth inside the Exchange, in
determining whether to offer qualified health plans in the large group
market through an Exchange.
C. Availability of Grants to States in Support of the Premium Review
Process
Section 2794(c)(1) directs the Secretary to carry out a program to
award grants to States during the five-year period beginning with
fiscal year 2010 to assist in carrying out the requirements of Section
2794(a). For example, these grants can be used to assist States in
reviewing and, if appropriate under State law, approving premium
increases for health insurance coverage; and providing information and
recommendations to the Secretary under Section 2794(b)(1).
Section 2794(c)(2)(A) provides for an appropriation to the
Secretary of $250,000,000 out of all funds in the Treasury not
otherwise appropriated, to be available for expenditure for the State
grants. Section 2794(c)(2)(C) requires the Secretary to establish a
formula for determining the amount of any grant to a State under this
subsection that considers the number of plans of health insurance
coverage offered in each State and the population of the State (with
the requirement that no State qualifying for a grant shall receive less
than $1,000,000 or more than $5,000,000 for a grant year).
Additionally, Section 2794(c)(2)(B) provides that if these
appropriated amounts are not fully obligated under the above mentioned
State grants by the end of fiscal year 2014, any remaining funds are to
remain available to the Secretary for grants to States for planning and
implementing the insurance reforms and consumer protections under Part
A of the PPACA.
D. Effective Dates
Section 1004(a) of the PPACA provides that the provisions of
Section 2794 of the PHS Act shall become effective for fiscal years
beginning with fiscal year 2010.
II. Solicitation of Comments
A. Information Regarding Regulatory Guidance
The Department is inviting public comment to aid in the development
of regulations regarding Section 2794 of the PHS Act, and is especially
interested in the perspectives of researchers, policy analysts, health
insurance issuers, and States. To assist interested parties in
responding, this request for comments describes specific areas in which
the Department is particularly interested.
This request for comments identifies a wide range of issues that
are of interest to the Department. Commenters should use the questions
below to assist in providing the Department with useful information
relating to the development of regulations regarding Section 2794 of
the PHS Act. However, it is not necessary for commenters to address
every question. Individuals, groups, and organizations interested in
providing information relating to one or more of the topics discussed
herein may do so at their discretion by following the above mentioned
instructions.
Specific Areas in which the Department is interested include the
following:
1. Rate Filings and Review of Rate Increases
The Act requires the Secretary, in conjunction with States, to
establish a process for the annual review of unreasonable increases in
health
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insurance premiums. A justification for an unreasonable premium
increase is also required.
a. To what extent do States currently have processes in place to
review premium rates and rate increases?
1. What kinds of methodologies are used by States to determine
whether or not to approve or modify a rate or a rate increase? What are
the pros and cons of these differing methodologies?
2. Are special considerations needed for certain kinds of plans
(for example, HMOs, high deductible health plans, new policies, and
closed blocks of business)? If so, what special considerations are
typically employed and under what circumstances?
b. Where applicable, do health insurance issuers currently provide
actuarial memorandums and supporting documentation relating to premium
rate calculations, such as trend assumptions, for all premium rates and
rate increases that are submitted, and/or for all premium rates and
rate increases that are reviewed?
1. How is medical trend typically calculated?
2. Are specific exhibits, worksheets or other documents typically
required? If so, are these documents generally submitted to the State
Insurance Department directly, and if so, in what format?
3. To what extent do issuers use the following categories to
develop justifications for rate increases: cost-sharing, enrollee
population including health risk status, utilization increases,
provider prices, administrative costs, medical loss ratios, reserves,
and surplus levels? Are there other factors that are considered?
c. What level(s) of aggregation (for example, by policy form level,
by plan type, by line of business, or by company) are generally used
for rate filings, rate approvals, and any corrective actions? What are
the pros and cons associated with each level of aggregation in these
various contexts?
d. What requirements do States currently have relating to medical
trend and rating calculations? What are the pros and cons of these
different requirements, and what additional requirements could
potentially be set?
1. Do States generally allow enrollees under the same policy form
to be further subdivided for purposes of calculating medical trends and
rates?
2. Do States generally allow enrollees under different policy forms
to be grouped together for these calculations, and if so, how?
2. Defining Unreasonable Premium Rate Increases
The Act provides that the initial and continuing rate review
process under Section 2794 is only to be undertaken for unreasonable
premium rate increases.
a. In States that currently have rate review processes, are all
rates or rate increases generally reviewed? If so, for what markets
and/or products? If not, what criteria do these States typically use
when determining which rates or rate increases will be reviewed? To
what extent do States require that these reviews take place before the
proposed rate increases can be implemented?
b. To what extent have States developed definitions of what
constitutes a premium rate increase warranting review?
3. Public Disclosure
The Act requires that health insurance issuers prominently post the
justification for an unreasonable premium increase on their Internet
Web sites prior to implementation of the increase.
a. To what extent is information on premium rates and premium rate
increases, and related justifications, currently made available to the
public?
1. To what extent are annual summaries of premium rate increases
currently made available to the public on State or consumer Web sites,
and/or made available by request? Where available, to what extent is
this information generally provided by policy form, type of product,
line of business, or some other grouping?
2. To what extent are rate filings with actuarial justification and
supporting documentation generally made available to the public? In
what format(s) are rate filings currently made available to the public?
What format(s) would be most useful to the public?
3. What kinds of supporting documentation are necessary for
consumers to interpret these kinds of information?
b. What kinds of information relating to justification for an
unreasonable premium increase could potentially be made available?
4. Exclusion From Exchange
For plan years beginning in 2014, States receiving grants in
support of the rate review process must make recommendations, as
appropriate, to the State Exchange about whether particular insurance
issuers should be excluded from participation in the Exchange based on
a pattern or practice of excessive or unjustified premium increases.
a. To what extent have States developed definitions of what
constitutes an excessive or unjustified premium rate increase and/or a
pattern or practice of such increases? How could a pattern or practice
of excessive unjustified premium increases be defined in this context,
and what are some of the pros and cons of the various approaches that
are available?
b. What criteria could be established to determine whether insurers
have engaged in a pattern or practice of excessive or unjustified
premium increases?
5. Grant Allocation
The Act directs the Secretary to allocate $250 million in grant
money to States to carry out the rate review process.
a. What factors could be considered in grant allocation?
b. What weighting could be given to different factors and why?
B. Information Regarding Economic Analysis, Paperwork Reduction Act,
and Regulatory Flexibility Act
Executive Order 12866 requires an assessment of the anticipated
costs and benefits of a significant rulemaking action and the
alternatives considered, using the guidance provided by the Office of
Management and Budget. These costs and benefits are not limited to the
Federal government, but pertain to the affected public as a whole.
Under Executive Order 12866, a determination must be made whether
implementation of Section 2794 of the PHS Act will be economically
significant. A rule that has an annual effect on the economy of $100
million or more is considered economically significant.
In addition, the Regulatory Flexibility Act may require the
preparation of an analysis of the economic impact on small entities of
proposed rules and regulatory alternatives. An analysis under the
Regulatory Flexibility Act must generally include, among other things,
an estimate of the number of small entities subject to the regulations
(for this purpose, plans, employers, and issuers and, in some contexts
small governmental entities), the expense of the reporting,
recordkeeping, and other compliance requirements (including the expense
of using professional expertise), and a description of any significant
regulatory alternatives considered that would accomplish the stated
objectives of the statute and minimize the impact on small entities.
The Paperwork Reduction Act requires an estimate of how many
``respondents'' will be required to comply with any ``collection of
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information'' requirements contained in regulations and how much time
and cost will be incurred as a result. A collection of information
includes recordkeeping, reporting to governmental agencies, and third-
party disclosures.
Furthermore, Section 202 of the Unfunded Mandates Reform Act of
1995 (UMRA) requires that agencies assess anticipated costs and
benefits and take certain other actions before issuing a final rule
that includes any Federal mandate that may result in expenditure in any
one year by State, local, or tribal governments, in the aggregate, or
by the private sector, of $135 million.
The Department is requesting comments that may contribute to the
analyses that will be performed under these requirements, both
generally and with respect to the following specific areas:
1. What policies, procedures, or practices of health insurance
issuers and States may be affected by Section 2794 of the PHS Act?
a. What direct or indirect costs and benefits would result?
b. Which stakeholders will be impacted by such benefits and costs?
c. Are these impacts likely to vary by insurance market, plan type,
or geographic area?
2. Are there unique costs and benefits for small entities subject
to Section 2794 of the PHS Act?
a. What special consideration, if any, is needed for these health
insurance issuers or plans that they sell?
b. What costs and benefits have issuers experienced in implementing
requirements relating to rate review under State insurance laws or
otherwise?
3. Are there additional paperwork burdens related to Section 2794
of the PHS Act, and, if so, what estimated hours and costs are
associated with those additional burdens?
Signed at Washington, DC this 8th day of April, 2010.
Donald B. Moulds,
Acting Assistant Secretary for Planning and Evaluation, Office of the
Secretary, Department of Health and Human Services.
[FR Doc. 2010-8600 Filed 4-12-10; 10:15 am]
BILLING CODE 4150-03-P