The Department of Health and Human Services has exercised one of the new authorities it has been granted under the Affordable Care Act this week. The agency has denied a rate proposal request from Everence Insurance of Pennsylvania. This marks the first time the agency has made use of its new authority over the nation’s insurance companies. Everence Insurance must now rework their rate proposal so that it aligns with what the HHS defines as reasonable.
Earlier this year, Everence submitted a rate increase proposal to the Pennsylvanian Department of Insurance. The company had sought to raise rates by an average of 12% statewide. The Affordable Care Act dictates that federal insurance regulators have the authority to review these rate proposals if states cannot do so themselves. Regulators with the HHS reviewed the rates proposed by Everence and deemed it “unreasonably high.”
Everence has stated that the data used by the HHS to reach such a determination may not have been completely accurate. The insurer says that higher rates are necessary to continue to compete in the insurance market. The HHS, however, is requiring the insurer to re-evaluate the necessity of higher rates and submit a new proposal to federal regulators that is more feasible for the current economic environment.
This is the first time the agency has made use of its new regulatory authority. The HHS notes that use of this authority will be rare, as most states have their own rate review processes in place.
