House Study Bill 114 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON COWNIE) A BILL FOR An Act requiring independent actuarial reviews for certain 1 health insurance rate increase applications. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1938YC (2) 85 av/nh

H.F. _____ Section 1. NEW SECTION . 505.18A Health insurance rate 1 increase applications —— independent actuarial review required. 2 1. When the commissioner receives an application for a 3 rate increase filed by a health insurance carrier licensed 4 to do business in the state, the commissioner shall retain 5 an independent actuary to perform a secondary review of the 6 application in addition to the review of the application 7 performed by the actuarial staff of the division. 8 2. The independent actuary retained shall be qualified 9 to perform such a review and shall not have a relationship, 10 financial or otherwise, with the health insurance carrier 11 that submitted the application, with other health insurance 12 carriers licensed to do business in the state, or with the 13 insurance industry in this state generally, that could create 14 a conflict of interest or that could otherwise interfere with 15 the performance of the independent actuary’s duties under this 16 section. 17 3. In performing the secondary review, the independent 18 actuary shall verify the processes employed by the actuarial 19 staff of the division to ensure that the division is conforming 20 to actuarial best practices in the division’s review of 21 applications for health insurance rate increases. 22 4. The independent actuary shall be provided full access to 23 all data filed by the health insurance carrier in support of 24 its application for a rate increase. The independent actuary 25 may request additional information from the carrier or from 26 any other party to the application necessary to carry out the 27 independent actuary’s duties under this section and the carrier 28 or other party to the filing shall furnish the additional 29 information requested. 30 5. The independent actuary shall provide a written report 31 of its secondary review and conclusions concerning the rate 32 increase application to the commissioner. The commissioner 33 shall post the report on the division’s internet site for 34 public review prior to approval, disapproval, or modification 35 -1- LSB 1938YC (2) 85 av/nh 1/ 3

H.F. _____ of the rate increase proposal by the commissioner. 1 6. If the application is for a rate increase in an amount 2 that requires public hearing and comment as required under 3 section 505.19, the commissioner shall conduct a public hearing 4 and meet the other requirements of section 505.19 prior to 5 approval, disapproval, or modification of the rate increase 6 proposed. 7 7. The reasonable cost of retaining an independent actuary 8 to perform a secondary review under this section shall be borne 9 by the health insurance carrier that filed the application for 10 a rate increase. 11 8. The commissioner shall adopt rules pursuant to chapter 12 17A to implement the provisions of this section. 13 EXPLANATION 14 This bill requires the commissioner of insurance to retain 15 an independent actuary to perform a secondary review of an 16 application for a rate increase filed by a health insurance 17 carrier licensed to do business in the state. The secondary 18 review shall be in addition to the review of the application 19 performed by the actuarial staff of the insurance division. 20 The independent actuary retained shall be qualified to 21 perform such a review and shall not have a relationship, 22 financial or otherwise, with the health insurance carrier 23 that submitted the application, with other health insurance 24 carriers licensed to do business in the state, or with the 25 insurance industry in the state generally, that could create a 26 conflict of interest or that could otherwise interfere with the 27 performance of the independent actuary’s duties under the bill. 28 In performing the secondary review, the independent actuary 29 shall verify the processes employed by the division’s actuarial 30 staff to ensure that the division is conforming to actuarial 31 best practices in reviewing rate increase applications. 32 The independent actuary shall be provided full access to all 33 data filed by a health insurance carrier in support of its rate 34 increase application and may request additional information 35 -2- LSB 1938YC (2) 85 av/nh 2/ 3

H.F. _____ from the carrier or any other party to the application as 1 necessary to carry out the independent actuary’s duties. The 2 carrier or other party must furnish the additional information 3 requested. 4 The independent actuary shall provide a written report 5 of its secondary review and conclusions concerning the rate 6 increase application to the commissioner who shall post the 7 report on the insurance division’s internet site for public 8 review prior to approval, disapproval, or modification of the 9 rate increase proposal. 10 If the application is for a rate increase in an amount that 11 exceeds the average annual health spending growth rate stated 12 in the most recent national health expenditure projection 13 published by the centers for Medicare and Medicaid services of 14 the United States department of health and human services, and 15 for that reason requires public hearing and comment under Code 16 section 505.19, the commissioner shall fulfill the requirements 17 of Code section 505.19 prior to approval, disapproval, or 18 modification of the rate increase proposed. 19 The reasonable cost of retaining an independent actuary 20 to perform a secondary review shall be borne by the health 21 insurance carrier that filed the application for a rate 22 increase. The commissioner shall adopt rules to implement the 23 provisions of the bill. 24 -3- LSB 1938YC (2) 85 av/nh 3/ 3