Legal Alert: CMS Issues Unreasonable Rate Increase Final Rule


The recently published Rate Increase Disclosure and Review Final Rule, which takes effect July 18, 2011, provides that certain health insurance issuers with a rate increase filed in a state or becoming effective on or after September 1, 2011, will be subject to review for reasonableness if the rate increase is 10% or more. This could create problems for employers with fully-insured health plans utilizing a small group policy.

The Affordable Care Act requires the Department of Health and Human Services in conjunction with states to establish an annual review process for unreasonable rate increases in health insurance coverage. The Center for Consumer Information and Insurance Oversight and the Centers for Medicare and Medicaid Services (CMS) published the rate increase disclosure and review final rule on May 23, 2011, which will become effective on July 18, 2011.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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