2010 Grants to States for Health Insurance Premium Review-Cycle I (re-release)

On March 23, 2010, the President signed into law the Patient Protection and Affordable Care Act of 2010 (PPACA).

On March 30th, 2010, the Health Care and Education Reconciliation Act of 2010 was also signed into law.

The two laws are collectively referred to as the Affordable Care Act.


The Affordable Care Act includes a wide variety of provisions designed to promote a high quality, high value, health care system.

These include significant grant funding to assist States in working with the Federal Government to implement comprehensive health reform.

One of the first grant programs to be launched is established under Section 2794 of the Public Health Service Act (PPACA Section 1003) entitled, ?Ensuring That Consumers Get Value for Their Dollars?.

Section 2794, together with several other provisions that take effect this year, are designed to help make private health insurance more accessible and affordable and increase the transparency of the health insurance system by providing new oversight of health insurance companies.

Section 1003 of the Affordable Care Act requires the Secretary of the Department of Health and Human Services (HHS), in conjunction with the States, to establish a process for the annual review of health insurance premiums to protect consumers from unreasonable, unjustified and/or excessive rate increases.

This requirement takes effect beginning with the 2010 plan year.

Key components of this oversight require insurers to report certain health insurance rate information to both the Secretary and the States in which they operate, including:
1. All increases in rates for health insurance over the prior year that meet the established unreasonable threshold (currently under development); 2. Justifications for unreasonable increases in rates prior to their implementation.

The Secretary will ensure public disclosure of this information and insurers will be required to prominently post the information on their respective Internet websites.

Section 2794 also provides for a program of grants to states to help them improve the health insurance rate review and reporting process.

Congress has appropriated $250 million for this grant program for the federal fiscal years (FFYs) of 2010-201 4. HHS is authorized to award this money during multiple award cycles to eligible States beginning in FFY 201 0. Federal regulatory guidance is currently under development to establish the statutorily mandated process of annual rate review for health insurance.

This will include factors to be used in determining whether or not a proposed rate increase is ?unreasonable? and the criteria for evaluating if an unreasonable rate is ?excessive or unjustified.? These regulations also will establish criteria for future grant awards to support States? development and implementation of the review process.

HHS has requested state input through a Request for Information (RFI) in the Federal Register (FR Doc.

2010-8600 Filed 4-12-10) and is working with state insurance commissioners through the National Association of Insurance Commissioners (NAIC).

All States are eligible for the first rate review grants (Cycle I), which is being made prior to the release of the Federal regulatory guidance.

In order to receive a grant, an applicant must propose a prospective plan to use grant funds to develop or enhance the state process for health insurance rate review in FFY 2011, including a plan for disclosing rates to the public and the Secretary.

All successful Cycle I grant awardees will receive $1 million awards.

The release of the second grant cycle (Cycle II) solicitation will occur after the release of the Federal regulatory rate review guidance.

Grant awardees will be required to implement the rate review requirements detailed in regulatory guidance.
Related Programs

Affordable Care Act (ACA) Grants to States for Health Insurance Premium Review

Department of Health and Human Services

Agency: Department of Health and Human Services

Office: HHS - Office of the Secretary

Estimated Funding: Not Available

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2010 Grants to States for Health Insurance Premium Review-Cycle I (re-release)

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