DOI Rejects Insurer Rate Increases

Health Care For All has long called for an accountable, public process to protect consumers against unjustified premium rate increases. Today the Division of Insurance ruled that premium increases of as high as 35% are not reasonable.

The State House News Service reported that speaking at a small business breakfast this morning, Governor Patrick said that “Small businesses and working families can’t wait any longer.” He called on hospitals and care providers to “do what they can do to lower the costs they are passing on to insurers,” adding: “You don’t have to wait for a change in law. Be part of the solution now.”

Massachusetts health plans filed a total of 274 requests to raise small group premium rates in accordance with the Governor’s emergency regulation, 211 C.M.R. § 43.08. Today the Division of Insurance rejected 86% of those proposed premium rate hikes. In a press release, Commissioner Murphy explained, “At the beginning of this process and throughout our review of the rate filings, we made it clear to insurers that the Division of Insurance would be taking a close look at proposed increases. In most cases, Division staff determined that the changes were excessive and necessitated disapproval.”

According to DOI, three common deficiencies plagued the 235 rejected filings: they failed to illustrate how the carriers pay similarly situated providers differing rates of reimbursement based solely on quality of care, mix of patients, intensity of services, and geographic location at which care is provided; they failed to demonstrate that carriers have renegotiated provider reimbursement rates; and they were significantly above the medical consumer price index without adequate explanation of the wide difference.

The premium rates of the disapproved filings ranged from increases of 8.30% to 35.20%. The chart below illustrates how each health plan fared (note – the increases for the approved plans were not released by DOI; we’ll update the chart when the information is available).


Health Plan
No. of
Proposed Increases
No.
Rejected
Range of
Proposed Increases
Aetna 2 0
Blue Cross Blue Shield 19 19 10.36%-16.60%
Blue Cross Blue Shield HMO Blue 64 63 9.30%-22.60%
Connecticare 24 0
Fallon Community Health Plan 47 47 21.70%-35.20%
Harvard Pilgrim Health Care 26 25 8.30%-12.60%
Health New England 30 30 13.40%-19.80%
Neighborhood Health Plan 19 15 11.00%
Tufts Health Plan 36 36 11.10%-24.70%
United HealthCare 7 0
Total 274 235

The approved premium filings contained rate increases of equal to or less than 7.7%. Insurers now have 15 days to file an appeal and hearings will be held within 30 days of that filing. DOI hearing officers will preside over the hearings, but these will not be staffers involved in the premium rate approval process. The DOI expects a number of hearings to be held toward the end of April.

Consumers who have already started paying the now-rejected premium rates must be credited the difference. Insurers may continue to file other rate increase proposals for the rejected plans 30 days in advance of their implementation date, but until those are approved, premiums will remain at last year’s rates.

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