NAIC Unanimously Adopts PPACA Responses

State insurance commissioners completed the first step of over a dozen requirements under the new Patient Protection and Affordable Care Act law providing health insurance to all Americans.

Over 20 commissioners were on the executive committee/plenary call headed by National Association of Insurance Commissioners President and West Virginia Commissioner Jane Cline with the assistance of Sandy Praeger, Kansas Insurance Commissioner and chair of the NAIC’s “B” Health Committee.

Praeger detailed the work on two conference calls on May 11 and 12, during which the responses were discussed and finalized. She emphasized that what was being voted on was simply a response to questions put in the Federal Register by Secretary of the Department of Health and Human Services Kathleen Sebelius. PPACA requires the NAIC to develop a definition and calculation for medical loss ratios. That work is ongoing and will be addressed during a June 1 conference call, according to Praeger. The response to the questions in the Federal Register will be sent to Sebelius on or before the due date of May 14, this Friday.

During the conference calls several issues were raised. One was a decision to state that states’ past rate review processes should not affect grants to states and that all states be able to share in grants that the federal government is making toward implementation of rate reviews. The federal government is allocating $250 million to states to help with the rate review process, according to Praeger.

The call followed a May 12 joint call of the NAIC’s “B” Committee and the Financial Condition “E” Committee. Regulators running that call included Steve Ostlund of Alabama, Julia Philips of Minnesota and Rick Diamond of Maine.

During that call, the issue was raised that states which do the most work should receive a share of those grants because of the additional burdens of complying with the new law. However, it is difficult at this time to assess what should be allocated because it is uncertain what the costs or employee hours will be for these tasks, according to the discussion.

During the same call, Philips, who was heading up a subgroup on rate filings, said that states did not have a consensus on a definition of unreasonable rates. Since there is no bright line consensus, the response to the question leaves the concept as “potentially unreasonable,” she added.

Herb Olsen, a regulator from Vermont, said that company improvements to database systems, while not specifically medical improvements are system type quality improvements and should be considered in a medical loss ratio.

Lou Felice, a New York regulator on the “E” Committee, said that the matter could be considered during work on the medical loss ratio and possibly be included as part of the numerator in the calculation. Olsen responded that as long as consideration was given to the issue, that would be acceptable.

Joan Gardiner, a representative of Blue Cross/Blue Shield, Chicago, argued against having a checklist for unreasonable rates, petitioning for more general principles such as being “actuarially sound, not discriminatory, and being consistent with medical loss ratio requirements.”

However, Minnesota’s Philips said that she really thinks the question being put to regulators focused on what rates could be unreasonable.

Bonnie Burns, representing California Health Advocates, Scotch Valley, Calif.,and a funded consumer of the NAIC, Kansas City, Mo., raised the issue of minimum benefit plans and wording in the response. She expressed concern that the language assumes those plans will disappear but raised the possibility that some may remain. If those plans do not entirely disappear, she raised concern that some may fall into a gray area where they are not regulated. She urged that the language be tempered to reflect the possibility that they may not completely go away and that there may be a need to regulate them.

In response, regulators changed the wording, using the word ‘may’ to reflect uncertainty and leave open the possibility that oversight may be needed.