HSB 114 (LSB 1938YC (2) 85)

HOUSE FILE _____

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON COWNIE)

A BILL FOR

An Act requiring independent actuarial reviews for certain health insurance rate increase applications.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  505.18A  Health insurance rate increase applications —— independent actuarial review required.
   1.  When the commissioner receives an application for a rate increase filed by a health insurance carrier licensed to do business in the state, the commissioner shall retain an independent actuary to perform a secondary review of the application in addition to the review of the application performed by the actuarial staff of the division.
   2.  The independent actuary retained shall be qualified to perform such a review and shall not have a relationship, financial or otherwise, with the health insurance carrier that submitted the application, with other health insurance carriers licensed to do business in the state, or with the insurance industry in this state generally, that could create a conflict of interest or that could otherwise interfere with the performance of the independent actuary’s duties under this section.
   3.  In performing the secondary review, the independent actuary shall verify the processes employed by the actuarial staff of the division to ensure that the division is conforming to actuarial best practices in the division’s review of applications for health insurance rate increases.
   4.  The independent actuary shall be provided full access to all data filed by the health insurance carrier in support of its application for a rate increase. The independent actuary may request additional information from the carrier or from any other party to the application necessary to carry out the independent actuary’s duties under this section and the carrier or other party to the filing shall furnish the additional information requested.
   5.  The independent actuary shall provide a written report of its secondary review and conclusions concerning the rate increase application to the commissioner. The commissioner shall post the report on the division’s internet site for public review prior to approval, disapproval, or modification of the rate increase proposal by the commissioner.
   6.  If the application is for a rate increase in an amount that requires public hearing and comment as required under section 505.19, the commissioner shall conduct a public hearing and meet the other requirements of section 505.19 prior to approval, disapproval, or modification of the rate increase proposed.
   7.  The reasonable cost of retaining an independent actuary to perform a secondary review under this section shall be borne by the health insurance carrier that filed the application for a rate increase.
   8.  The commissioner shall adopt rules pursuant to chapter 17A to implement the provisions of this section.
EXPLANATION
   This bill requires the commissioner of insurance to retain an independent actuary to perform a secondary review of an application for a rate increase filed by a health insurance carrier licensed to do business in the state. The secondary review shall be in addition to the review of the application performed by the actuarial staff of the insurance division.
   The independent actuary retained shall be qualified to perform such a review and shall not have a relationship, financial or otherwise, with the health insurance carrier that submitted the application, with other health insurance carriers licensed to do business in the state, or with the insurance industry in the state generally, that could create a conflict of interest or that could otherwise interfere with the performance of the independent actuary’s duties under the bill.
   In performing the secondary review, the independent actuary shall verify the processes employed by the division’s actuarial staff to ensure that the division is conforming to actuarial best practices in reviewing rate increase applications.
   The independent actuary shall be provided full access to all data filed by a health insurance carrier in support of its rate increase application and may request additional information from the carrier or any other party to the application as necessary to carry out the independent actuary’s duties. The carrier or other party must furnish the additional information requested.
   The independent actuary shall provide a written report of its secondary review and conclusions concerning the rate increase application to the commissioner who shall post the report on the insurance division’s internet site for public review prior to approval, disapproval, or modification of the rate increase proposal.
   If the application is for a rate increase in an amount that exceeds the average annual health spending growth rate stated in the most recent national health expenditure projection published by the centers for Medicare and Medicaid services of the United States department of health and human services, and for that reason requires public hearing and comment under Code section 505.19, the commissioner shall fulfill the requirements of Code section 505.19 prior to approval, disapproval, or modification of the rate increase proposed.
   The reasonable cost of retaining an independent actuary to perform a secondary review shall be borne by the health insurance carrier that filed the application for a rate increase. The commissioner shall adopt rules to implement the provisions of the bill.