Ensuring that consumers get value for their dollars

(a)

In general

Part C of title XXVII of the Public Health Service Act (42 U.S.C. 300gg–91 et seq.) is amended by adding at the end the following:

2793.

Ensuring that consumers get value for their dollars

(a)

Initial rate review process

(1)

In general

(A)

Establishment

The Secretary, in conjunction with States, shall establish a uniform process for the review, beginning with the 2011 plan year, of potentially unreasonable increases in rates for health insurance coverage, which shall include premiums. (B)

Electronic reporting

The process established under subparagraph (A) shall include an electronic reporting system established by the Secretary through which health insurance issuers shall— (i)report to the Secretary and State insurance commissioners the information requested by the Secretary pursuant to this subsection; and (ii)submit data to the uniform data collection system in accordance with paragraph (6)(A). (C)

Authority of States

Nothing in subparagraph (A) or (B) shall be construed to prohibit a State from imposing additional requirements on health insurance issuers with respect to increases in rates for health insurance coverage, including with respect to reporting information to a State. (2)

Justification and disclosure

The process established under paragraph (1) shall require health insurance issuers to submit to the Secretary and the relevant State a justification for a potentially unreasonable rate increase prior to the implementation of the increase. Such issuers shall prominently post such information on their Internet websites. The Secretary shall ensure the public disclosure of information on such increases and justifications for all health insurance issuers. (3)

Health insurance rate authority

(A)

In general

The Secretary shall establish a Health Insurance Rate Authority (referred to in this paragraph as the Authority) to be composed of 7 members to be appointed by the Secretary, of which— (i)at least 2 members shall be a consumer advocate with expertise in the insurance industry; (ii)at least 1 member shall be an individual who is a medical professional; (iii)at least 1 member shall be a representative of health insurance issuers; and (iv)such remaining members shall be individuals who are recognized for their expertise in health finance and economics, actuarial science, health facility management, health plans and integrated delivery systems, reimbursement of health facilities, and other related fields, who provide broad geographic representation and a balance between urban and rural members. (B)

Role

In addition to the other duties of the Authority set forth in this subsection, the Authority shall advise and make recommendations to the Secretary concerning the Secretary’s duties under this subsection. (4)

Corrective action for unreasonable rate increases

(A)

In general

Pursuant to the procedures set forth in this paragraph, the Secretary or the relevant State insurance commissioner shall— (i)in accordance with the process established under paragraph (1), review potentially unreasonable increases in rates and determine whether such increases are unreasonable; and (ii)take action to ensure that any rate increase found to be unreasonable under clause (i) is corrected, through mechanisms including— (I)denial of the rate increase; (II)modification of the rate increase; (III)ordering rebates to consumers; or (IV)any other actions that correct for the unreasonable increase. (B)

Required report; definition

The Secretary shall ensure that, not later than 6 months after the date of enactment of this section, the National Association of Insurance Commissioners (referred to in this section as the Association), in conjunction with States, or other appropriate body, will provide to the Secretary and the Authority— (i)a report on— (I)State authority to review rates and take corrective action in each insurance market, and methodologies used in such reviews; (II)rating requests received by the State in the previous 12 months and subsequent actions taken by States to approve, deny, or modify such requests; and (III)justifications by insurance issuers for rate requests; and (ii) (I)a recommended definition of unreasonable rate increase, which shall consider a lack of actuarial justification for such increase; and (II)other recommended definitions for the purposes of carrying out this subsection. (C)

Determination of who conducts reviews for each State

Using the report submitted pursuant to subparagraph (B), the Secretary shall determine not later than 1 year after the date of enactment of this section and periodically thereafter— (i)for which States the State insurance commissioner shall undertake the actions described in subparagraph (A)— (I)based on the Secretary’s determination that the State has sufficient authority and capability to deny rates, modify rates, provide rebates, or take other corrective actions; and (II)as a condition of receiving a grant under subsection (c)(1); and (ii)for which States the Secretary shall undertake the actions described in subparagraph (A), in consultation with the relevant State insurance commissioner, based on the Secretary’s determination that such States lack the authority and capability described in clause (i). (D)

Transition period

Until the Secretary makes the determinations described in subparagraph (C), the relevant State insurance commissioner shall, as a condition of receiving a grant under subsection (c)(1), carry out the actions described in subparagraph (A) to the extent permissible under State law. (5)

Prioritizing potentially unreasonable rate increases for review

The Secretary or the relevant State insurance commissioner may prioritize— (A)rate increases that will impact large numbers of consumers; (B)rate reviews requested from States, if applicable; and (C)rate reviews in the individual and small group markets. (6)

Annual report

(A)

Uniform data collection system

The Secretary, in consultation with the Association and the Authority, shall develop, and may contract with the Association to operate, a uniform data collection system for new and increased rate information, which shall include information on rates, medical loss ratios, consumer complaints, solvency, reserves, and any other relevant factors of market conduct. (B)

Preparation of annual report

Using the data obtained in accordance with subparagraph (A), the Authority shall annually produce a single, aggregate report on insurance market behavior, which includes at least State-by-State information on rate increases from one year to the next, including by health insurance issuer and by market and including medical trends, benefit changes, and relevant demographic changes. (C)

Distribution

The Authority shall share the annual report described in subparagraph (B) with States, and include such report in the information disclosed to the public. (b)

Continuing rate review process

As a condition of receiving a grant under subsection (c)(1), a State, through the applicable State insurance commissioner, shall provide the Secretary with information about trends in rate increases in health insurance coverage in premium rating areas in the State, in accordance with the uniform data collection system established under subsection (a)(6)(A). (c)

Grants in support of process

(1)

Rate review grants

The Secretary shall carry out a program to award grants to States beginning with fiscal year 2010 to assist such States in carrying out subsection (a), including— (A)in reviewing and, if appropriate under State law, approving or taking corrective action with respect to rate increases for health insurance coverage; and (B)in providing information to the Secretary under subsection (b). (2)

Funding

(A)

In general

There is authorized to be appropriated to the Secretary $250,000,000, to be available for expenditure for grants under paragraph (1). (B)

Allocation

The Secretary shall establish a formula for determining the amount of any grant to a State under this subsection. Under such formula— (i)the Secretary shall consider the number of plans of health insurance coverage offered in each State and the population of the State; and (ii)no State qualifying for a grant under paragraph (1) shall receive more than $5,000,000 for a grant year. (d)

Authorization of appropriations

In addition to the amount authorized under subsection (c)(2), there are authorized to be appropriated to carry out this section $5,000,000 for fiscal year 2010 and such sums as may be necessary for each subsequent fiscal year.

(b)

Enforcement

Title XXVII of the Public Health Service Act (42 U.S.C. 300gg et seq.) is amended— (1)in section 2722— (A)in subsection (a)— (i)in paragraph (1), by inserting and section 2793 after this part; and (ii)in paragraph (2), by inserting or section 2793 after this part; and (B)in subsection (b)— (i)in paragraph (1), by inserting and section 2793 after this part; and (ii)in paragraph (2), by inserting or section 2793 after this part each place such term appears; and (2)in section 2761— (A)in subsection (a)— (i)in paragraph (1), by inserting and section 2793 after this part; and (ii)in paragraph (2)— (I)by inserting or section 2793 after set forth in this part; and (II)by inserting and section 2793 after the requirements of this part; and (B)in subsection (b)— (i)by inserting and section 2793 after this part; and (ii)by inserting and section 2793 after part A. (c)

Effective date

The amendment made by this section shall take effect on the date of enactment of this Act.