$1M grant to help tighten insurance rules

Posted Aug. 16, 2010, at 11:05 p.m.

Maine has received a $1 million grant from the federal Department of Health and Human Services to help hold down the cost of health insurance premiums.

The money is part of a five-year, $250 million federal allocation in the Affordable Care Act legislation that reforms the nation’s health care system. The funding is aimed at boosting states’ ability to review insurance rate increase requests and compliance with existing and emerging health insurance regulations.

The goal is to “help improve the oversight of proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure Mainers receive value for their premium dollars,” according to an announcement Monday from HHS Secretary Kathleen Sebelius.

In Maine, a spokeswoman for the health insurance industry said Maine already imposes a heavy regulatory burden on insurers and that additional pressure is unlikely to relieve consumer costs in the absence of other cost-containment initiatives, such as reducing the cost and utilization of health care services themselves.

“We’re already doing what we can to keep rates low,” said Katherine Pelletreau, executive director of the Maine Association of Health Plans. “Rates are a symptom of a more complicated problem.”

According to Mila Kofman, superintendent of the Maine Bureau of Insurance, the new federal funding will be used to improve and expand the review of small-group rate increases, to make more information available to consumer advocacy groups and to the general public, and to improve data compiling and tracking technology.

Kofman, who this week is attending a meeting of the National Association of Insurance Commissioners in Seattle, said some funding will be provided to consumer advocacy groups to hire actuaries to crunch the complicated numbers of health insurance finance.

If insurance companies doing business in Maine are not complying with existing laws and regulations, Kofman said, her office may request additional oversight capability from the Maine Legislature.

Among other topics being addressed at the insurance commissioners meeting this week is the issue of “medical loss ratio” — the amount of each health insurance premium dollar that must be spent on patient care versus administration and profit. The Affordable Care Act requires a national minimum 80-20 ratio — 80 percent of premiums must be spent to pay for direct health care and “activities that improve health care quality,” according to the law.

Those activities are not defined in the federal statute and the association of insurance commissioners is charged with coming up with those definitions and ways to measure compliance.

Kofman said state insurance commissioners, who must consider the financial stability of insurance companies as well as the best interest of consumers, are meeting in a number of work groups to work on the issue with a vote expected Tuesday. The recommendations of the group must then be approved by the federal Department of Health and Human Services.

The 80-20 medical loss ratio provision will take effect in 2011. Maine law currently requires a minimum 65 percent medical loss ratio in the nongroup market and 78 percent in the small group market.

Last month, Kofman asked the Obama administration to waive the 80-20 requirement in Maine, voicing concerns that its implementation before 2014, when other consumer protections go into effect, could cause one of the two companies that sells insurance coverage to Mainers not enrolled in employer group plans to stop doing business in the state.

There has been no response yet to Kofman’s request.

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