Tuesday, June 08, 2010

Secretary Sebelius Announces $51 Million in Affordable Care Act Grants to Innovate, Improve and Enhance Health Insurance Premium Rate Review

New grant program providing $250 million to states over next five years will strengthen oversight of insurance premiums and rate hikes

HHS Secretary Kathleen Sebelius today (June 7) announced the availability of $51 million in Health Insurance Premium Review Grants through the Affordable Care Act. These funds are the first round of grants available to states through a new $250 million grant program to create and strengthen insurance rate review processes.

"This is an important step in putting consumers back in control of their health care," said Secretary Sebelius. "These new grants will help states protect consumers and small employers by holding insurers accountable for unreasonable insurance rate increases that have made coverage unaffordable for many American families. By strengthening oversight of insurance premiums, these grants will help put affordable coverage back within the reach for Americans who have been hit hard by skyrocketing costs."

All states and the District of Columbia are eligible for this first round of rate review grants. To receive a grant, a state must submit a plan for how it will use grant funds to develop or enhance its process of reviewing and approving, disapproving, or modifying health insurance premium requests. States with successful applications will receive a $1 million grant during the first round.

"These funds will help states strengthen their oversight capabilities and will allow states that do not currently review rates to establish a program," said Jay Angoff, Director of the Office of Consumer Information and Insurance Oversight. "By subjecting rates to new public scrutiny, the oversight of premium increases will ultimately help ensure that consumers receive substantial value for their insurance dollars."

In early May, Secretary Sebelius sent a letter to Governors and State Insurance Commissioners urging them to review the authority they have under their state laws to determine whether they have all of the regulatory tools needed to approve health insurance rates before they take effect.

Several provisions in the Affordable Care Act strengthen HHS' and states' oversight of insurance premiums and rate hikes. These include the Medical Loss Ratio, requiring insurers in the individual and small group markets to spend at least 80 percent of the premium dollar on health care, and insurers in the large group market to spend at least 85 percent of the premium dollar on health care; rate review, requiring insurers to justify unreasonable premium increases to state regulators and the Secretary of Health and Human Services; and grant funds for states to help create or strengthen reporting and review processes.

The Health Insurance Premium Review Grants that will be available during FY 2010 are only the first in a five-year grant program. HHS will take applications for a second round of state grants beginning in Fiscal Year 2011, after new regulations regarding rate review take effect. Second-round grants will allow states to further strengthen their rate review, and begin to provide the Secretary of HHS with the rate data required under the law.

This grant solicitation can be found at grants.gov.

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