NovaRest, Inc. continues to make great strides in efforts to assist states with their insurance rate review process. In Illinois, NovaRest is currently reviewing the rates of individual and small group insurance companies that have increased rates by more than 10%.
Starting September 1, 2011, insurers seeking rate increases of 10 percent or more for non-grandfathered plans in the individual and small group markets are required to publicly disclose the proposed increases and the justification for them. According to U.S. Health and Human Services, an effective rate review system must receive sufficient data and documentation concerning rate increases to conduct an examination of the reasonableness of the proposed increases. It must consider the factors below as they apply to the review:
-Medical cost trend changes by major service categories
-Changes in utilization of services (i.e., hospital care, pharmaceuticals, doctors’ office visits) by major service categories
-Cost-sharing changes by major service categories
-Changes in benefits
-Changes in enrollee risk profile
-Impact of over- or under-estimate of medical trend in previous years on the current rate
-Reserve needs
-Administrative costs related to programs that improve health care quality
-Other administrative costs
-Applicable taxes and licensing or regulatory fees
-Medical loss ratio; and
-The issuer’s capital and surplus
The rate review must make a determination of the reasonableness of the rate increase under a standard set forth in State statute or regulation.
It must post either rate filings under review or preliminary justifications on their websites or post a link to the preliminary justifications that appear on the CMS website and must provide a mechanism for receiving public comments on proposed rate increases. Finally, it must report results of rate reviews to CMS for rate increases subject to review.