In this second installment of our two part series on rate review, we’ll take a closer look at transparency, requirements for an “effective” state program, and how the rate review grants program is helping states improve their review processes.

Transparency is an important element of the Affordable Care Act (ACA). The rate review provision of the ACA provides an “unprecedented level of scrutiny and transparency to health insurance rate increases” to protect consumers from unjustified premium increases. Consumers in all 50 states will have access to the proposed rate increases, an explanation from the insurer as to why it believes an increase is necessary, and, for the first time, be able to comment on the proposed rate increase. After analysis and public comment the final determination, and the reasoning behind it, are made public.

Rate review information is available on at: You can look up proposed rate increases by insurance company or overall by state.

The transparency that the rate review program provides not only protects consumers from unjustified rate increases, it promotes competition and encourages insurers to keep costs down. It builds on other provisions (such as the Medical Loss Ratio 80/20 rule) and aligns with the ACA’s goal to make health care more affordable.

Every state must have an “effective” rate review program. If it doesn’t, HHS will review rates for the state. The Center for Consumer Information & Insurance Oversight defines “An effective rate review system” as follows:

  • Must receive sufficient data and documentation concerning rate increases to conduct an examination of the reasonableness of the proposed increases.
  • Must consider the factors below as they apply to the review:
    • Medical cost trend changes by major service categories
    • Changes in utilization of services (i.e., hospital care, pharmaceuticals, doctors’ office visits) by major service categories
    • Cost-sharing changes by major service categories
    • Changes in benefits
    • Changes in enrollee risk profile
    • Impact of over- or under-estimate of medical trend in previous years on the current rate
    • Reserve needs
    • Administrative costs related to programs that improve health care quality
    • Other administrative costs
    • Applicable taxes and licensing or regulatory fees
    • Medical loss ratio
    • The issuer’s capital and surplus
    • Must make a determination of the reasonableness of the rate increase under a standard set forth in State statute or regulation.
    • Must post either rate filings under review or preliminary justifications on their websites or post a link to the preliminary justifications that appear on the CMS website.
    • Must provide a mechanism for receiving public comments on proposed rate increases.
    • Must report results of rate reviews to CMS for rate increases subject to review.

Source: CCIIO

Forty-four states and the District of Columbia have rate review programs that the HHS has deemed “effective.”  Some states have the power to deny or modify the proposed rate increase if it is deemed unreasonable. Other states can determine the rate is unreasonable, but don’t have the authority to stop the insurer from implementing the increase. HHS will review proposed rate increases for states that do not have an “effective” review program, but it lacks the authority to deny rate increases.

The $250 million Rate Review Grants Program is designed to provide states with funding to improve their rate review programs. These funds have made it possible for states to build and improve the quality and efficiency of their rate review programs and provide consumers with greater transparency and protection from unjustified rate hikes. HHS anticipates awarding additional funds in 2012 and 2013 to help states further improve their ability to protect consumers.

According to the 2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for consumers, the rate review grants program has helped 21 states expanded the scope of their rate review efforts, 41 states have improved the quality and efficiency of their rate review process, and 42 states have increased consumer transparency. In addition, it has helped states empower consumers with information that was previously not available.

Before the ACA most consumers were left in the dark regarding premium rate increases. Many experts believe this lead to insurance company abuses and unnecessarily high premiums. The Rate Review Program and the Rate Review Grants Program have helped states provide consumer protection by analyzing and disclosing proposed double digit rate increases to consumers.

Read: Rate Review – Protecting Consumers from Unjustified Premium Increases: Part One


2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for Consumers

Quantifying the Effects of Health Insurance Rate Review


Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

Health insurance premiums have grown rapidly over the past decade, and, in most cases, insurance companies were not legally required to justify rate increases to consumers. Now, to comply with the rate review provision of the Affordable Care Act (ACA), insurers must submit proposed double-digit premium increases for review by the state or the U.S. Department of Health and Human Services (HHS).

Rate review helps ensure that premium increases are based on realistic costs. Insurance companies in small group and individual markets that want to raise premiums 10 percent or higher are required to submit justification for the increase for review. The state Department of Insurance (DoI) reviews each proposed rate increases to verify that it is reasonable, and make the information about the review available to the public. If the DoI does not have an “effective” rate review program, HHS will review the proposed increase. This scrutiny and transparency promotes competition, motivates insurers to keep health care costs down, and protects consumers from unjustified rate increases.

Overview of results

Fifty percent of the rate review determinations made so far have resulted in either a lower increase than originally proposed or no increase at all. On average, rate increases implemented were 2.8% lower than the proposed increase. To date, rate review has saved consumers in the individual and small group markets an estimated $1 billion, and resulted in lower premium increases for nearly 800,000 people.

Market National average rate increase implemented Savings to consumers
Individual market 1.4% lower than originally requested $425 million
Small group market 0.8% lower than originally requested $600 million

Source: 2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for Consumers by HHS/

In its October 2012 report Quantifying the effects of Health Insurance Rate Review The Kaiser Family Foundation analyzed rate review data from 32 states and the District of Columbia. Kaiser found that 20 percent or the rate filings “resulted in lower premium increase than the insurer initially requested.” The KFF study also found that rates varied by market (individual or small group) and by state.

Average Rate Change Requested Average Rate Change Implemented
Individual 8.9% 6.3%
Small Group 5.2% 4.7%
States 6.8% 5.4%

Source: Quantifying the effects of Health Insurance Rate Review, by Kaiser Family Foundation.

The rate review program has had a positive impact on keeping insurance rate increases in check, not only by rejecting unjustified increases, but by motivating insurers to withdraw or modify their proposed rate increases due to the scrutiny and public exposure the rate review program provides. Of the rate increases submitted for review:

  • 26% were deemed unreasonable or rejected
  • 12% were withdrawn prior to determination
  • 26% modified the proposed rate
  • 36% no reduction to requested increase was made

While review programs were in effect in many states prior to the ACA, rate hikes often faced little or no scrutiny. The rate review program under the ACA provides much greater scrutiny and transparency, and helps to protect consumers from unjustified premium increases.

In part two of this series on rate review we’ll take a closer look at transparency, requirements for an “effective” state program, and how the rate review grants program is helping states improve their review processes.


2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for Consumers

Quantifying the Effects of Health Insurance Rate Review (PDF)

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

Why have exchanges? … What’s an exchange? What isn’t?: A Two-Part Blog Series on Health Care Insurance Exchanges

By Brian Bohlig, chief marketing officer
Extend Health – A Towers Watson company

We’ve seen dramatic paradigm shifts for our employer clients and their retirees that come out of combining the power of health reimbursement arrangements and the individual Medicare market through an exchange. Here are some basics tenets that we have found to be differentiators in the value exchanges can offer:

  • An exchange is not just a website. There’s a lot more to it. On the back-end, an exchange should seamlessly parse compliant enrollment data to carriers and the state exchanges accurately and laser fast. An exchange should offer robust customer service to help your employees identify the best plans for them.
  • An exchange is not just a call center. A lot of the technological advantages of the online environment, like electronically filing enrollments within 24 hours, are lost to your group if your exchange is still working largely by fax or mail.
  • Real-time reporting is crucial to making the transition from a group plan to an exchange. If an exchange can’t give you real-time reporting during enrollment, you’re driving blind. Worse yet, your only reporting channel could be hearing from your own group that things aren’t going well.
  • A one-carrier exchange is like the sound of one hand clapping. A carrier website that offers only its own plans denies consumers competitive value, denies consumers options if that carrier raises rates and denies consumers a consumer advocacy partner.

At Extend Health, we built our exchange on the pillars of a web interface, back-end support systems and benefit advisors. Unlike many other online shopping experiences, buying health care coverage is one of the most complex and costly ventures people have to deal with in their lives and the quality of what’s picked relative to your health needs is critical. So it’s really important to consider more than just the lowest cost premium.

Despite having invested many millions in our technology platform, we’ve found that there’s no substitute for a knowledgeable helping hand when choosing the best health plan. Extend Health employs hundreds of knowledgeable, licensed professionals who spend time on the phone with our consumers to make sure they’ve considered the important elements of their medical needs, prescription drug needs and lifestyle needs when choosing a plan. Our technical systems set the high bar in the private Medicare exchange marketplace, but our benefit advisors are our secret sauce. They bridge the gap between the technology side and the real-life decision points that go into picking the best health coverage for each individual.

Health insurance exchange checklist

Based on this deep well of experience and development, here’s what you should look for when evaluating a health insurance exchange.

Multiple health insurance carriers

• Provides true choice, price comparison and competition

Intuitive user

• Empowers people with robust benefit and price information
• Collects key info on medical, prescription and lifestyle needs
• Matches key info to the best set of health plans available by ZIP code

Robust back-
end systems

• Submits a complete, compliant enrollment application online and fast
• Seamlessly transmits data to and from state exchanges

Strong customer

• Provides a helping hand matching key info to the best plans
• Advocates for consumers with carriers on the exchange

Nimble reporting capabilities

• Allows insight into the application process
• Gives insight into communications uptake, plan choices and exchange performance

Caveat emptor: If the exchange you’re looking at is missing one or more of these, there are some more serious questions you should be asking.

Keep this list of questions and answers handy when you’re evaluating an exchange partner. See full list: Questions To Ask An Exchange

  • Has an employer ever pulled out of your exchange during open enrollment?
  • What percent of enrollment applications are you still submitting on paper, either by fax or mail?
  • Do you offer real-time reporting on call wait times or during the enrollment application process?

At Extend Health, we have set and raised the bar on end-to-end exchange technology, from our user interface to our back-end and call management systems to our real-time, interactive reporting interface. The first goal of our exchange model and technology infrastructure has always been to make the user experience as smooth as possible – for consumers to choose health plans and for employers who want to increase options their employees’ options while managing health benefit costs.

There’s a world of uncertainty out there and you don’t want your employees or retirees to be the beta testers of a fledgling exchange. Arm yourself with these questions and know what you’re walking into.

For regular commentary on developments and trends in health care, insurance, and technology, follow @brycewatch and @ExtendHealth on Twitter and check out

Related articles

Read part one in this two part series: Exchanges Part 1: Everyone wants in

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

Why have exchanges? … What is an exchange? What isn’t?: A Two-Part Blog Series on Health Care Insurance Exchanges

By Brian Bohlig, chief marketing officer
Extend Health – A Towers Watson company

You wouldn’t call it a stock exchange if only one company was selling shares on it, right? It’s easy to see how that kind of a market would benefit the company selling on it – buy my product and forget the rest.

But how does that help consumers?

As a corporate or government employer or professional/trade association, you should be asking this question if you want to offer employees /members – present or retired – health care coverage through an exchange.

What you find when you look under the hood of some of exchanges might surprise you, because some models aren’t set to drive all the value and savings organizations and consumers  aspire to when making the transition from a group health insurance plan to the individual market.

Why an exchange?

The reason for exchanges in the first place is to help get a handle on an industry known for its complexity and high costs. A nimble exchange has the potential to slice through health care and insurance industry complexity and costs with:

  • Apples to apples comparisons – Putting comparable plans from different carriers beside one another so consumers can make sense of the benefit differences.
  • Transparency – Showing pricing, not just of medical plans but also helping assess out-of-pocket costs consumers could see down the road based on prescription medication needs, the kinds of doctors they see and where.
  • Objectivity – A system that doesn’t promote certain plans for non-consumer-oriented reasons, like commissions, or for the administrative ease of the exchange itself.
  • Cost-savings – By making it easy to compare plans side by side, it creates a competitive environment where consumers can pick the least expensive plan that meets their needs best.

Extend Health has been running an exchange for eight years. In 2005, when the Medicare Modernization Act did for Medicare insurance plans what health care reform is doing for everyone else now, we set up the first real private Medicare exchange  – an exchange that gave retired employees of our employer clients access to the individual Medicare plan market – an exchange that moved beyond the one-size fits all structure of employer group plans. We enrolled retirees from our first employer, Chrysler, in 2006.

Today we offer the largest number of carriers – over 75 and counting, serve the largest number of employer clients – over 175 (40+ Fortune 500s) and counting, and the largest number of consumers who have selected individual Medicare plans through our exchange – over 200,000 and counting.

Since Extend Health became a Towers Watson company back in May and the Supreme Court ruling upholding health care reform, many clients, retiree, reporters and others in the health care industry have been asking us about exchanges and what to expect.

At this pivotal point in the evolution of health care in our nation, Extend Health is in a unique position. Features of the Medicare environment, like guaranteed issue and standardized plans, are being applied to the rest of the U.S. health care environment. And we have deep, long-standing measures and knowledge about how consumers, employers and carriers have fared on the Extend Health exchange.

In the next post of this series, I share what experience has taught us about what to look for and what to ask when you’re considering an exchange.

For regular commentary on developments and trends in health care, insurance, and technology, follow @brycewatch  and @ExtendHealth on Twitter and check out

Related articles

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

On August 22, 2012 CMS Announced 500 primary care practices that will participate in the Comprehensive Primary Care (CPC) demonstration project in a new partnership between payers and primary care providers. Backed by the ACA, the goal of this multi-payer initiative is to deliver better coordinated, higher quality, patient-centered care, and to reduce costs.

The CPC’s goal was to enroll about 75 primary care practices in several regions spanning eight states: Arkansas, Colorado, New Jersey, New York, Ohio & Kentucky, Oklahoma, Oregon. Practices were chosen in a competitive process based on several criteria.

  • Use of health information technology
  • Ability to demonstrate recognition of advanced primary care delivery by accreditation bodies
  • Service to patients covered by participating payers
  • Participation in practice transformation and improvement activities
  • Diversity of geography, practice size and ownership structure.

The chosen practices are to begin delivering health care services under the program in the fall of 2012, and are projected to serve over 300,000 people with Medicare. For more details and a complete list of participating primary care practices visit the CMS Innovation web site and read the CMS press release.


Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

Kaiser Health News recently published a helpful FAQ on “Decoding the $716 Billion in Medicare Reductions.” This FAQ addresses some of the questions being raised in the Medicare debate, including where the $716 billion figure came from, where reductions in Medicare spending are expected, and more. It’s a good read and we invite your comments.

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

The GAO recently released the new report title Medicaid Expansion: States’ Implementation of the Patient Protections and Affordable Care Act. The report contains results of research conducted to see what states are doing to implement Medicaid expansion, learn what their responsibilities are, and identify what challenges they face. It addresses the following issues relating to implementing Medicaid expansion:

  • State responsibilities
  • Actions taken to prepare
  • States’ views on the financial implications of expansion

The GAO conducted a web-based survey and interviewed Medicaid officials in six states: Colorado, Georgia, Iowa, Minnesota, New York, and Virginia. They selected these states based on:

  • Size of expected enrollment
  • Enrollment rates
  • Geographic dispersion
  • Insurance coverage provided to childless adults

The ACA requires Medicaid eligibility to be expanded to non-elderly people with incomes at or below 133% or the federal poverty level (FPL). It also specifies that each state must change how it determines Medicaid eligibility, as well as streamline eligibility and enrollment systems that will coordinate enrollment across Medicaid, Children’s Health Insurance Program (CHIP) and the state health insurance exchanges.

The bill allows states to opt out of the expansion, but stipulates that they will lose their existing federal Medicaid funds if they do so. When the Supreme Court ruled on the constitutionality of the health care law in June of 2012, it modified the provision on Medicaid expansion by allowing states to opt out without losing their existing federal Medicaid funding. This change prompted the Congressional Budget Office (CBO) to update its budget estimates, reflecting projections that fewer people will be covered by Medicaid and CHIP, while more people will be enrolled through state health insurance exchanges and uninsured than in its previous estimate. The GAO completed its field work on this study prior to the Supreme Court’s ruling, so the impact of that decision was not included in their analysis. However, the requirements for states that choose to participate in the Medicaid expansion have not changed as a result of the Supreme Court decision and the report is still a useful snapshot of how these states are getting on with preparations for it.

Requirements for states that participate in Medicaid expansion

By January 1, 2014 states must:

  • Expand eligibility to non-elderly people with incomes at or below 133% of FPL
  • Streamline their enrollment process
  • Transition to Modified Adjusted Gross Income (MAGI) to determine income eligibility
  • Identify those who are newly eligible to obtain federal matching funds
  • Simplify and streamline the eligibility determination process

Table 1: ACA provisions included in the GAO study.

ACA Provision


Medicaid eligibility Expand eligibility to non-elderly people with incomes at or below 133% of FPL.
Modified adjusted gross income (MAGI) Transition to using MAGI to determine income eligibility.
Early expansion option States can expand coverage to newly eligible people prior to January 1, 2014.
Maintenance of effort States must maintain eligibility standards until an exchange is fully operational.
Federal matching Federal matching funds will be provided to states for newly eligible adults.
Streamlined eligibility and enrollment systems “States must provide a process for individuals to apply for or renew their Medicaid eligibility through a website that enrolls individuals in the appropriate program (Medicaid, CHIP, or exchanges) no matter to which program they originally apply.”

The GAO found that the states studied are taking steps to prepare for Medicaid expansion, but they face some challenges including the need for additional federal regulations and guidance. CMS has issued a final Medicaid rule and indicated that more guidance will be forthcoming. In addition, the majority of state budget directors interviewed believe the following factors will contribute to the cost of expanding Medicaid.

  1. Administration required to manage Medicaid enrollment
  2. Acquisition or modification of information technology systems to support Medicaid
  3. Enrolling people who were previously eligible, but have not so far enrolled in Medicaid

They also expressed uncertainty about:

  • The impact of shifting exiting Medicaid enrollees into health benefit exchanges
  • Fiscal capacity and the state’s share of Medicaid expenditures
  • Guidance needed to develop budget estimates
  • Additional regulations and/or guidance needed on
    • How to apply MAGI
    • Conversion of Medicaid eligibility standards
    • Access to eligibility data through the Federal Data Services Hub

After reviewing and commenting on the study, HHS agreed to provide states with additional regulations and/or guidance on MAGI conversion and FMAP computation. HHS also reiterated that the decision to participate in Medicaid expansion is up to the state – there is no deadline date for their decision – and federal matching funds are available to help states cover information technology costs for modernizing eligibility systems, which don’t have to be paid back if the state decides not to expand Medicaid.

Read the GAO report

Previous blog post: CBO update estimates $84 billion savings from SCOTUS decision

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

Extend Health held a tweet chat today on health care costs. There were some great questions and excellent answers from John Barkett, Dir. of Policy Affairs at ExtendHealth fielded questions. John worked in congress on health care and his wealth of knowledge was evident in the answers he provided.

If you missed our tweet chat you can read a complete recap of the event. Hope to see you at the next one!

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

Extend Health exhibited at the Garland Senior Fair in Texas this past Sat, Aug 4. There was a great turnout of over 350 people from the community and surrounding areas including seniors, their families, community leaders and service providers like us, who care about seniors and senior issues.

State Representative Angie Chen Button thanked Dwight and Ivory in person for exhibiting at the fair, fulfilling an invitation that she extended to Bryce Williams, Towers Watson Managing Director of Extend Health, at the ribbon-cutting of the first Extend Health service center in Richardson this past May.

Richardson Mayor Bob Townsend encouraged everyone to make good use of the resources available. And many other community leaders, including City of Rowlett Senior Advisory Board members Pamela Bell and Wayne Baxter, met with attendees and the community groups and companies exhibiting.

Dwight Turner and Ivory Rooks, both senior benefit advisors for Extend Health, who have years of experience helping seniors choose the best Medicare plans for them, served as Extend Health ambassadors. They answered people’s questions about Medicare and shared resources with them, explaining the role Extend Health can play in helping to connect people with the best coverage for their needs.

According to Dwight, “We put the care into shopping for Medicare!“

Ivory added, “It was great to be able to connect in person with people and extend a helping hand.”

Extend Health contributed a Texas-themed gift basket, which was raffled off to a lucky winner. The day was welcome chance to connect in person with many in a community that is very important to Extend Health.

We recently announced that Extend Health is bringing over 500 jobs to the community with the opening of its second service center in the Richardson Telecom Corridor.

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

On June 28, 2012 the Supreme Court announced its decision on the health care law, which upheld the constitutionality of the individual mandate and allowed states to opt-out of Medicaid expansion. The Congressional Budget Office (CBO) recently released an updated budget estimate to reflect changes in the insurance coverage provision of the ACA resulting from the Supreme Court’s decision.

While SCOTUS upheld the constitutionality of the ACA’s individual mandate that requires people to purchase insurance or pay a penalty tax, this is not the reason why the CBO revised its budget estimate. The update was necessary to reflect projections stemming from the SCOTUS decision that fewer people will be covered by Medicaid and CHIP (6 million), and more people will be enrolled in and exchanges (2 million) and uninsured (4 million) than their previous estimate. As a result of these changes, CBO estimates net costs will be $84 billion less than originally projected.


CBO Budget Estimates for(2012 – 2022) Net Costs (billions)
March  2012 $1,252
July 2012 – Post SCOTUS update $1,168
Savings $84


Changes In Insurance Coverage (millions)

March 2012 July 2012 Difference
Medicaid & CHIP












Numbers may not add up to totals because of rounding.

Read the entire CBO report.

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.