CareFirst, other insurers back in D.C. Council’s crosshairs

May 15, 2013, 2:52pm EDT Updated: May 15, 2013, 3:19pm EDT

CareFirst, other insurers back in D.C. Council’s crosshairs

Ben Fischer

Staff Reporter- Washington Business Journal

D.C. Councilman David Catania, I-At large, an influential voice on health care issues, plans to introduce legislation forcing insurance regulators to take a closer look at large hikes in health insurance premiums.

When the full D.C. Council considers a controversial proposal to mandate use of a new health insurance exchange, Catania intends to propose an amendment requiring public review of exchange plans with rate hikes that exceed medical inflation rates.

His amendment, still being drafted, would require a 30-day public comment period and a public hearing for qualifying rate hikes, as well as an affirmative decision from the D.C. Department of Insurance, Securities and Banking.

Under current law, the department has some latitude in how it decides to review rates and often lowers them before approval, but rate hikes are deemed approved after 60 days if the department hasn’t taken action.

Catania cast his proposal as an olive branch to business groups that fear extraordinary growth in their health insurance premiums if they are forced into the exchange.

"The issue is how do we go forward in a way that eases some of the concerns raised — that are legitimate — about the unknown in terms of price increases, yet still be faithful to the Affordable Care Act," Catania said.

Catania’s chief of staff, Ben Young, said the councilman’s general goal is to shift intensive rate review from an option to a requirement for rates that grow more quickly than overall medical spending, as defined by the Centers for Medicare & Medicaid Services.

In early 2010, the D.C. Council approved an emergency law prohibiting rate hikes of more than 15 percent, but the la expired and its permanent version includes no bright-line thresholds for more intensive review. The new law, however, does require that the rate hikes be published online and that regulators make sure they are not excessive, inadequate or discriminatory.

"We take this seriously," said Associate Insurance Commissioner Phil Barlow. "We don’t just arbitrarily decide to look at filings or not. We give all filings scrutiny. Some — the filings that affect a lot of people or that have significant rate increases — we give them more."

CareFirst controls about three-quarters of the District’s insurance market. But three other insurance companies are expected to sell through the exchange, including Aetna Inc., Kaiser Permanente and UnitedHealthcare.

A CareFirst spokesman declined comment.

So far, the work to create the insurance exchange has unfolded with relative peace between the District government and insurance companies. Even though carriers are fighting mandatory use of the exchange, the rules are designed to foster maximum participation and flexibility. That strategy reflects the view of Executive Director Mila Kofman, who believes open competition within the exchange will serve to hold down rates.

But bringing up rate review could revive old disputes from several years ago, when rate regulation fever struck after double-digit hikes.

Does the extra review really lead to lower rates?

Georgetown University health policy professor Sabrina Corlette said the public hearings backed by Catania would make D.C. one of the most aggressively regulated jurisdictions in the country. Oregon has a similar procedure.

"I can tell you in Oregon, the folks out there definitely believe that having a public process, and a hearing, absolutely does lead to lower requested rates," Corlette said.

Ben Fischer covers health care and law.

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