PROVIDENCE – Health Insurance Commissioner Christopher F. Koller has authorized Blue Cross & Blue Shield of Rhode Island to raise its Direct Pay rates by an average of about 7 percent, effective April 1.

The hike, which will affect about 14,000 individuals who buy their coverage directly from Blue Cross, would be the first since 2008; last year, Koller refused to grant any hike at all, though Blue Cross wanted to raise rates by 5.9 percent.

This time, Blue Cross sought a 10.2 percent average hike, then agreed to reduce it to 9.5 percent after making a deal with Attorney General Patrick C. Lynch’s office, which acts as a consumer advocate in Direct Pay rate hearings. The deal was filed as a stipulation in the case late last month, effectively deciding the case for the hearing officer, John A. Cogan Jr., Koller’s executive assistant for policy and program review.

Koller himself, however, isn’t bound by stipulations – he just has to base his decision on the information presented at the hearing. On Monday, Koller issued an order requiring Blue Cross to pare its rate hike down below the agreed-upon level, saying the stipulation had inadequately addressed Blue Cross’ obligation to “employ pricing strategies that enhance the affordability of health care coverage.”

Specifically, Koller said the stipulation wrongly allowed certain costs that Blue Cross had built into the rates, including state-administered medical services and the state premium tax. By removing those elements, the hike should be reduced to about 7 percent, he said in a news release.

However, Lt. Gov. Elizabeth H. Roberts, who had previously spoken out against both the original rate hike request and the compromise with Lynch, said that while she was "encouraged” by Koller's action, she still considered the hike “a tremendous financial burden for Rhode Islanders fighting for economic survival.”

“The continuing unaffordable and unsustainable health insurance rate increase requests will only multiply if we do not address the underlying escalating costs of health care,” Roberts added. “Even as we oppose these increases, we must at the same time concentrate aggressively on controlling the costs of health care and make it the focus of our implementation of health care reform in Rhode Island.”

Koller offered a similar perspective, stressing that the rate review process alone can't make health insurance affordable.

“Next year with this review, we will again be faced with a bad set of choices,” he said. To truly solve the problem, he said, the system as a whole must be reformed, with more subsidies to help consumers with premiums and changes to how providers are paid.

Blue Cross already has a financial assistance program in place for Direct Pay customers, AccessBlue, which reduces payments for people who meet income guidelines. More than 25 percent of current Direct Pay enrollees get help through AccessBlue, according to the company.

Blue Cross also has a set of “preferred” rates for people who pass medical underwriting, and a “Wellness Reward Program” that allows subscribers in one particular plan, HealthMate Coast-to-Coast Direct Plan 2000/4000, to earn a “reward” of 10 percent of their annual premiums if they complete a series of wellness requirements.

Blue Cross is the only Rhode Island insurer that currently offers individual coverage, and it’s required by its charter to offer coverage to all Rhode Island residents who are not eligible for health insurance through an employer, Medicare or Medicaid.

The insurer has two choices in response to Koller’s decision: It can accept it, or it can appeal in Superior Court.