Payers raise concerns over proposed rate-setting reforms in Massachusetts

The Massachusetts Division of Insurance is proposing new regulations around the rate-setting process that payers use to set premiums for members and small businesses, according to The Boston Globe.

The proposed changes would reduce the opportunities payers have to file rate increases for small businesses and require them to publicly disclose information that supports rates for individuals and small businesses. The current quarterly rate review process for small businesses would become annual, but payers could still request quarterly rate changes.

Payers currently set rates for individuals and small businesses at the same time, which is referred to as the "merged market." Rates set in the first quarter apply to individuals for the rest of that year, while small business rates can be set quarterly.

The state can reject rate increases it feels are "excessive, inadequate or unfairly discriminatory," but that has only happened once since 2012. 

A Division of Insurance spokesperson told the Globe the proposed changes are to improve transparency and to better support stability and affordability of plans offered in the merged market.

Payers, however, are concerned the proposed changes will politicize the state's rate review process.

"We are concerned that a public hearing process will unnecessarily politicize the rate development process and will distract from efforts to address the underlying drivers of healthcare costs," Lora Pellegrini, CEO of the Massachusetts Association of Health Plans, told the Globe in a statement.

Ms. Pellegrini said payers already face administrative expense limits and are required to return excesses to customers as premium rebates. She argued payers could become insolvent if rates are restricted and increases from providers and drug manufacturers aren't addressed.

The proposed changes could affect thousands of people. In 2018, 307,000 people and their dependents had individual plans, and 454,000 people were under small employer group plans in Massachusetts, according to the Globe.

A public hearing on the proposed regulations is scheduled for May 12.

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