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Mass. rejects premium hikes

Marion Davis

04/05/2010

INSURANCE COMMISSIONER Joseph G. Murphy said the health plans he rejected 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. /

BOSTON – The Mass. Division of Insurance has rejected the vast majority of rate hikes that health insurers wanted to impose on small businesses, finding them “excessive” and “unreasonable relative to the benefits provided.”
Empowered by a Feb. 10 emergency regulation ordered by the governor, Insurance Commissioner Joseph G. Murphy disapproved 235 of the 274 requested hikes, protecting businesses from what he said would have been double-digit premium increases.
In letters to the health plans, the division explained the reasons for the rejections, with three common “deficiencies,” Murphy’s office said:

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.

The hikes were significantly above the medical consumer price index, and the filings could not adequately explain the wide difference.

“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,” Murphy said. “In most cases, Division staff determined that the changes were excessive and necessitated disapproval.”
Massachusetts handles health insurance premiums very differently from Rhode Island – which reviews rates several months in advance and has strict standards set by law, with extensive public input and disclosure.
Until February, when Gov. Deval L. Patrick ordered the change, insurers just had to notify the Division of Insurance of any hikes the day they went into effect. Under the new order, insurers must submit their proposed increases, and actuarial data backing them up, 30 days in advance, and they’re subject to review by the division staff and outside consultants.
The proposals submitted to Murphy included hikes of 8 to 32 percent. The medical consumer price index is estimated at 4.8 percent.
According to an Associated Press report, Murphy rejected all 19 of the increases proposed by Blue Cross Blue Shield of Massachusetts, 63 of the 64 increases proposed by the Blue Cross HMO, all 47 proposed by Fallon Community Health Plan, and all 36 proposed by Tufts Health Plan. Harvard Pilgrim Health Care got one of its 26 requested hikes.
“This review effort by the Division of Insurance is one piece of the comprehensive effort by the Patrick-Murray Administration to reform small-group health insurance,” said Barbara Anthony, undersecretary of the Mass. Office of Consumer Affairs and Business Regulation. “It is vital that we work with insurers and providers to lower these costs that are hurting our small businesses and families.”
The Massachusetts Association of Health Plans said it’s working with its members to look at their administrative and legal options. All of the Bay State’s insurers are nonprofits, and several posted losses last year.
To learn more about how Massachusetts is regulating health insurance, go to www.mass.gov/doi.

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