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Increasing transparency on insurance rates

Health reform brings additional resources and more transparency to health insurance rates and the rate review process. In the past, rates have not been public until they become effective. Starting in September 2011, health plans must disclose when they request a rate increase that averages 10 percent or more and they must provide clear information on what factors are causing the proposed increases. This gives an opportunity for the public to comment about proposed rate increases before the new rates are effective.

New federal funding is available to states for rate review. While Minnesota has long been a leader in requiring prior review and approval of health insurance rate increases, the Minnesota Department of Commerce has received $3.9 million through the Affordable Care Act to increase scrutiny of rate increases.

After rates are approved, health reform ensures that insurers use your premium dollars wisely. Insurance companies must spend at least 80 to 85 percent of premium dollars on actual care and health care quality improvement, rather than administrative or marketing costs. If they don’t, the insurance companies will be required to provide a rebate to their customers starting in 2012.

Where can I find information on proposed health insurance rate increases?

Notices will be posted on www.HealthCare.gov and on each insurance company’s website.

I have been notified that my health plan has requested a rate increase. How do I submit comments?

If you are notified of an increase, or if you find a notice on www.healthcare.gov that your company has applied for a rate increase, please send your comments to this email address: HealthInsurance.RateComments@state.mn.us.

You can also call the Department at 651 296-6571 or send a letter to the following address:

Minnesota Department of Commerce
Attn: Rate Comments
85 East Seventh Place
St Paul, MN 55101-2198

If you have an issue or complaint regarding your insurance coverage or rates, please contact the Minnesota Department of Commerce Consumer Response Team at 1-800-657-3602 or 651-296-2488.

What information should I include when I submit my comments about a proposed rate increase?

It would be helpful to include the name of your insurance company or HMO, whether the insurance is an individual policy or a policy for employees, the previous rate, the amount of the increase in the rate, and when the rate increase will be effective.

If you are willing to be contacted if additional information is needed, please include your name and your email address, phone number, or mailing address.

I have heard the term Medical Loss Ratio being used related to health reform. What is Medical Loss Ratio (MLR)?

The Medical Loss Ratio (MLR) is a basic financial measurement used to encourage health plans to provide value to enrollees. If an insurer uses 80 cents out of every premium dollar to pay its customers' medical claims and activities that improve the quality of care, the company has a medical loss ratio of 80 percent. A medical loss ratio of 80 percent indicates that the insurer is using the remaining 20 cents of each premium dollar to pay administrative expenses, such as salaries, marketing, advertising, overhead, and other costs. Health reform sets minimum medical loss ratios for different markets.

Where can I find information on proposed health insurance rate increases?

Notices will be posted on www.HealthCare.gov and on each insurance company’s website.

I have been notified that my health plan has requested a rate increase. How do I submit comments?

If you are notified of an increase, or if you find a notice on www.healthcare.gov that your company has applied for a rate increase, please send your comments to this email address: HealthInsurance.RateComments@state.mn.us.

You can also call the Department at 651-296-6571 or send a letter to the following address:
Minnesota Department of Commerce
Attn: Rate Comments
85 East Seventh Place
St Paul, MN 55101-2198
If you have an issue or complaint regarding your insurance coverage or rates, please contact the Minnesota Department of Commerce Consumer Response Team at 1-800-657-3602 or 651-296-2488.

What information should I include when I submit my comments about a proposed rate increase?

It would be helpful to include the name of your insurance company or HMO, whether the insurance is an individual policy or a policy for employees, the previous rate, the amount of the increase in the rate, and when the rate increase will be effective.

If you are willing to be contacted if additional information is needed, please include your name and your email address, phone number, or mailing address.

I would like information on a rate increase but it is less than 10 percent. How do I find out about a rate increase that is less than 10 percent?

The best way to find out more information about a health plan rate increase can depend on the type of health plan you have.

Non-HMO Rate Increases

If you are covered by a plan that is not an HMO and you are considering filing a complaint, you can call the Minnesota Department of Commerce Consumer Response Team at 651-296-2488 or at 1-800-657-3602 if you live outside the Twin Cities metro area.
 
In Minnesota, insurance company rate filings, even those under 10%, are public once they have been approved. If you want to review the details of a rate filing, the Insurance Product Filing unit file room at the Minnesota Department of Commerce is open from 8-Noon and by appointment. The phone number to make an appointment is 651-297-3303.

The address for the department is:

Minnesota Department of Commerce
85 East Seventh Place, Suite 500
St Paul, MN 55101-2198
 
Many filings are accessible in electronic format. The file room computer has a CD-burner and USB port for downloading files. You must bring your own blank CD, memory stick or thumb drive. A printer is NOT available to print files. 
 
HMO Rate Increases

Rate increases by HMOs are regulated by the Minnesota Department of Health. If you have any questions regarding an HMO rate increase, you may contact the Minnesota Department of Health Managed Care Systems Section at 651-201-5100 or 1-800-657-3916. 
  
Self-Insured Employer Rate Increases

Rate increases under self-insured employer health plans are not regulated by the state. If you have any questions on a rate increase associated with a self-insured plan, you should talk to your Employer or plan administrator.

My health plan did not publish a notice that we would be receiving a rate increase that was more than 10 percent but I just got my new premium. Compared to last year, premiums are up by more than 10 percent. How can this be?

The notices are required when the base or average rate increase is 10 percent or more. Individual consumers may experience rate increases that are greater than 10 percent even when the company is not adjusting rates for its product by more than 10 percent. 

For example, a person may be covered by a small group. Under Minnesota law, small group rates may be adjusted annually on renewal due to claims experience, health status, or duration of coverage of the employees or dependents of the employer. The maximum amount of increase due to health status on small groups is 15 percent but the increase due to the small group’s change in health status is in addition to the overall change in the company’s small group rates filed with the department.

In the individual market, an example of a time that consumers may see a rate increase of 10 percent or more without a notice from their insurance company is if they move into a new age band . Their premium may go up by more than 10 percent due to the combination of the difference in rates for their new age and the rate increase that is being applied to all policyholders.

One other possibility is that you are impacted by a rate increase that was approved before the new requirements started in September 2011. Some rate increases are effective when a policy renews and can therefore take up to a year to impact all enrollees.

I have heard the term Medical Loss Ratio being used related to health reform. What is Medical Loss Ratio (MLR)?

The Medical Loss Ratio (MLR) is a basic financial measurement used to encourage health plans to provide value to enrollees. If an insurer uses 80 cents out of every premium dollar to pay its customers' medical claims and activities that improve the quality of care, the company has a medical loss ratio of 80 percent. A medical loss ratio of 80 percent indicates that the insurer is using the remaining 20 cents of each premium dollar to pay administrative expenses, such as salaries, marketing, advertising, overhead, and other costs. Health reform sets minimum medical loss ratios for different markets.

Has Minnesota looked at Medical Loss Ratios (MLRs) prior to the Affordable Care Act?

Yes. Minnesota has had its own medical loss ratio requirements. There are some differences in the way that expenses are categorized under the federal and state standards for medical loss ratio. A report is produced every year of the loss ratio experience in Minnesota’s individual and small employer health plan markets. 

How much of my premiums must be spent on health care and quality improvement activities?

Beginning in 2011, the Affordable Care Act requires insurance companies to spend at least 80 percent of the premium dollars they collect for insurance policies covering individuals and small groups on medical care and quality improvement activities.  Insurance companies must spend at least 85 percent of premium dollars collected from larger groups on medical care and quality improvement activities.

What happens if my insurance company does not spend the required 80 or 85 percent of premium dollars on medical care and quality improvement activities?

Insurance companies will be required to provide rebates to their consumers.

I never go to the doctor so my insurance company did not spend any of my premium dollars on my health care. Does this mean I will get 80 percent of my premium back as a rebate?

No. The calculation of rebates is not done on an individual basis. Rebate calculation is done based on total premium and expenditure data for each market in which the company operates.

If my company is required to send a rebate, when will I get it?

Insurance companies will be required to make the first round of rebates to consumers in 2012. Rebates must be paid by August 1st each year.

How will rebates be paid? Will I get a check in the mail?

There are several ways that companies can pay a rebate. The carrier may reduce premiums, send a rebate check, or, if the enrollee paid by credit card or debit card, credit a lump-sum reimbursement to the same account the enrollee used to pay the premium. In some cases, the rebate may go to the employer that paid the premium on the enrollee’s behalf. 

I am covered by Medicare and a Medicare supplement policy. Am I eligible for a rebate?

No. The rebates do not apply to Medicare or Medicare supplement policies.

I am covered by MinnesotaCare. Am I eligible for a rebate?

No. The rebate does not apply to state Minnesota Health Care Programs like MinnesotaCare.

I am covered by an employer plan. My employer pays most of the premium but I pay some too. If the rebate is less than my employer’s share of the premium, can my employer just keep the full rebate?

No. Even when the rebate is provided to the employer, each employee is entitled to a rebate that is proportional to the premium amount paid by that employee.

I understand that Minnesota just received new grant funding for rate review. How much funding was received?

The Minnesota Department of Commerce received a total of $3,900,899 in federal funding for rate review under the Affordable Care Act. This includes a baseline award of $3,000,000 as well as an additional $300,899 based on workload and $600,000 based on performance.

What will Minnesota use the rate review grant for?

The Minnesota Department of Commerce will use the rate review grant funds to make a number of improvements including hiring new staff, offering more transparency for consumers, analyzing data, improving systems and reporting capabilities, reviewing state statutes, introducing an audit program, etc.

Specifically Minnesota Plans to:

• Introduce legislation: Minnesota will review current statutes and best practices in other effective rate review States to propose legislative changes as needed.

• Improve rate filing requirements:  The Minnesota Department of Commerce, with the assistance of the Minnesota Health Economics Program and the Minnesota Department of Health, will study the history of rates, benefit patterns, actuarial values and expenses. Minnesota will also develop a Rate Review Procedures Manual and consultants will randomly audit filings to identify areas for improvement.

• Improve transparency and consumer interfaces: Minnesota will conduct interviews and focus groups with consumers to understand information gaps and will develop a web-based tool for consumers to understand rate filings. Minnesota plans to conduct a study on the value of making rate filings public. In addition, the State’s enhanced IT system will generate a public report of each filing.

• Hire new staff: Minnesota will create 3 new positions from the grant funding.

• Improve IT: Minnesota will develop systems to produce reports that analyze filings for consumers, and a database to house information collected from rate filings beginning in 2003, as well as a reporting module to provide information to the U.S. Department of Health and Human Services.