Delivery of Care

OHIC trims health insurer rate increases for 2022, citing affordability

Prompted in part by public comment, an intervention by RI Attorney General Neronha, and his own agency’s analysis, Commissioner Patrick Tigue reduced proposed rate increases by some $41.6 million

Photo by Richard Asinof

Patrick Tigue, R.I. Health Insurance Commissioner, in his office.

By Richard Asinof
Posted 9/6/21
Efforts to control rising medical costs have become front-and-center as Rhode Island’s health care delivery system confronts the challenges of a proposed hospital consolidation, the stresses on the system from the ongoing coronavirus pandemic, and questions about the long-term sustainability of the business models for the health care industry. The recent decision by OHIC on 2022 rates for commercial health insurers reflects those challenges.
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PROVIDENCE – We hold these truths to be self-evident: that all health care is personal, that health care delivery is complex and expensive, that place-based health initiatives can create better outcomes than just those to be found in a doctor’s or nurse’s office, and that the increasing medical costs in Rhode Island are a result not of utilization but from escalating drug prices, often driven by profit motive.

Here in Rhode Island, one of the major “hurricane” barriers erected to protect against the increasing costs of health insurance is the Office of the Health Insurance Commissioner, which reviews, modifies and then authorizes annual rate increases for commercial health insurance plans in the individual, small group, and large group categories.

On Wednesday, Sept. 2, R.I. Health Insurance Commissioner Patrick Tigue announced his decision on the proposed 2022 rate increases sought by commercial health insurers. In the news release accompanying his decision, Tigue said that he had “rejected all charges for profit and contributions to reserves in the 2022 rates that were filed with OHIC in May 2021 for review.”

In addition, Tigue said that several insurers were required to modify the actuarial assumptions set forth in their filings, which will produce additional savings for consumers.

As a result of these changes, Tigue continued, “Rhode Islanders will save [more than] $41.6 million in 2022 compared to what the commercial health insurers requested.”

Here are the rate increases that were approved by OHIC:

• In the individual market: Blue Cross and Blue Shield of RI, with 17,159 members, asked for a 3.1 percent increase, but was approved for a 0.1 percent increase. Neighborhood Health Plan of RI, with 24,866 members, asked for an 8.5 percent increase, but was approved for only a 3.5 percent increase.

• In the small group market, Blue Cross and Blue Shield of RI, with 40,255 members, requested a 2.9 percent increase, but received a minus 0.3 percent decrease. Neighborhood Health Plan of RI, with 1,730 members, requested a 6.5 percent increase, but only received a 1.5 percent increase. Tufts Health Plan, for its HMO plan, with 1,879 members, requested a 5.2 percent increase, but only received a 4.7 percent increase; Tufts Health Plan, for its PPO plan, with 946 members, requested a 5.1 percent increase, but only received a 4.6 percent increase. UnitedHealthcare, for its HMO plan, with 906 members, requested a rate increase of 17.5 percent but only received a 7.8 percent increase; UnitedHealthcare, for its PPO plan, with 2,220 members, requested a 10.7 percent increase, but received only a 1.3 percent increase.

• In the large group market, Blue Cross and Blue Shield of RI, with 68,936 members, requested a 7.4 percent increase, but received only a 4.6 percent increase. UnitedHealthcare, with 15,461 members, requested a 14.1 percent increase, but receively only a 7.7 percent increase. Tufts Health Plan, with 3,430 members in its HMO plans, and another 3,159 members in its PPO plan, requested 9.1 percent increases for both plans, but received only a 7.7 increase for both plans.

One factor clearly identified in the medical trend assumptions were rise in the costs of prescription drugs, which were the highest-cost trend across all three markets.

• In the individual market, prescription drugs received a 9.2 percent increase in 2022 rates; in the small group market, prescription drugs received a 10.1 percent increase in 2022 rates, and in the large group market, prescription drugs received a 7.5 percent increase in 2022 rates.

Translated, the high cost of prescription drugs is still the biggest cost factor that is driving medical costs higher in the commercial insurance market.

The state’s public health advocate weighs in
In response to Commissioner Tigue’s decision, R.I. Attorney General Peter Neronha issued the following statement:

“Several weeks ago, my Office objected – across the board – to requests by insurers to raise health insurance rates for Rhode Islanders, citing serious concerns about affordability in the context of the ongoing COVID-19 pandemic, the frequency of substantial annual rate increases, and adverse impact on minority communities already suffering from economic and health inequities.”

Neronha continued: “While I firmly believe that no rate increases are justified, I am encouraged to see that the Office of the Health Insurance Commissioner took into account affordability as a factor in denying requested rate increases from insurers.”

Tigue offers insights into his decision
ConvergenceRI asked R.I. Health Insurance Commissioner Patrick Tigue some questions, following up on his ruling on the proposed commercial insurance rates for 2022. Here are his responses:

ConvergenceRI: What is the message that you are sending with these rate decisions?
TIGUE: My message is two-fold: First, given the strong financial positions of the health insurers participating in the Rhode Island market and the hardships faced by many Rhode Islanders and small businesses in the state due to the pandemic, I did not agree that charges for profit or contributions to reserves should be built into premiums in 2022, so I rejected those charges, which substantially reduced the proposed rate increases.

Second, the cost of health care remains a core concern of mine. Expected medical trends for 2022, which ranged from 5.7 percent to 7.1 percent across different markets, drove the overall premiums that were ultimately approved by OHIC. This is a critical point.

Medical trend reflects the amount and types of services that consumers use, and the prices paid for those services. Through rate review we scrutinize the methods used to project these expenses and the influence of different factors, whether they be pharmaceutical prices or use of expensive inpatient services, etc.

We work hard to arrive at a medical trend that is reasonable, and which will support an actuarially sound premium. But more has to be done outside of rate review. Over time, we will not reduce premiums or materially reduce medical [cost] trends unless we support people and communities to live healthy lives and we reduce sources of inefficiency in health care delivery, while maintaining scrutiny over insurer administrative costs and profits.

ConvergenceRI: How important was the intervention by RI Attorney General Neronha?
TIGUE: OHIC has a good working relationship with the Attorney General’s Office and we value their input. I considered all of the public comments submitted by Rhode Islanders.

This year OHIC received the most substantial public comment that we have in recent years and this is a credit to those who organized so many people to make their voices heard.

I want to say a few things about how we use the public comments. Rhode Island law requires that the health insurance premiums set forth by the insurers for my review and prior approval be “consistent with proper business conduct” and “consistent with the interests of the public.”

These two standards can be mutually reinforcing and, at times, in tension with one another. Each standard comprises several elements, but here are the most salient ones.

• “Proper business conduct” means that the premiums are actuarially sound, support solvency, etc.

• The “public interest” includes supporting access to care, quality, and importantly, affordability. In addition to the “Affordability Standards” that are promulgated in regulation and include such policies as the cap on hospital price inflation and mandated investments in primary care, I can consider affordability in the context of rate review.

The public comments thoughtfully articulating the challenges facing Rhode Islanders during this difficult time are essentially evidence that I drew upon in rendering my decision.

My decision must be rational and based on evidence, not arbitrary and capricious. I must identify specific components of premium for modification and substantiate why the given components should be modified.

As a matter of administrative process, my decision to modify the rates proposed by the insurers can be appealed by the insurers, first in an administrative hearing, and ultimately in the courts.

It is important to have this strong evidence basis should those appeals be sought. This year the public comments, combined with my review of the insurers’ financial performance, were particularly helpful in substantiating my rationale for stripping charges for profits and contributions to reserves from the 2022 premiums.

I want to thank everyone who took the time to comment – including the Attorney General, who submitted actuarial analysis on the individual market filings as well.

ConvergenceRI: What is the current status of the proposed new affordability standards?
TIGUE: The new Affordability Standards are still under development. OHIC continues to meet with stakeholders to review the policy concepts and solicit feedback. This feedback will be considered as we develop changes over the next few months.

ConvergenceRI: In a recent story, I reported on the financial conundrum facing Women & Infants Hospital regarding what they say are flat or decreasing rates of reimbursements for births and deliveries. Is that an area worthy of investigation by OHIC regarding investments in maintaining access to quality health care?
TIGUE: I’m happy to speak with management at Care New England and Women & Infants hospital any time to discuss the issues brought to light in your article.

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