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California Rate Review Grants Award List

Cycle I Grant Application Summary

California Grantee: California Department of Managed Health Care

Award Date: August 16, 2010

Award Amount: $1,000,000

  • Pursue Additional Legislative Authority: The governor will present legislation that synchronizes review activities across the Department of Managed Health Care and Department of Insurance offices. California’s Department of Managed Health Care conducts limited review of small group and guaranteed issue rates for HMO and other managed care plans. The California Department of Insurance reviews health insurance premium increases in the non-HMO market prospectively. An actuary reviews rates for compliance with California’s 70 percent medical loss ratio rule and also assesses actuarial assumptions and trends. Insurers are contacted regarding most filings and approximately two thirds resubmit lower rates. For small group, plans must demonstrate compliance with rate factors requirements. There is no large group review by either entity.
  • Expand the Scope of the Review Process: California will expand the authority of the Department of Managed Health Care to collect and review all submitted individual and small group health insurance premium increases.
  • Improve the Review Process: The Department of Managed Health Care currently has limited review authority. Both the Department of Managed Health Care and the Department of Insurance will improve the collection of health insurance premium information, enhance the depth and breadth of current rate review activities, and make IT system improvements. The Department of Managed Health Care will initiate actuarial review of filings and the Department of Insurance will enhance its existing actuarial review capacity.
  • Increase Transparency and Accessibility: Currently only the Department of Insurance posts filings by insurance companies. The Department of Managed Health Care will also begin to post filings and both agencies will educate consumers on influential underlying factors of cost data so consumers are able to understand the cost of health care choices.
  • Develop and Upgrade Technology: California will build the infrastructure necessary to scrutinize a significantly greater number of rate proposals.

Cycle II Grant Application Summary

California Grantee(s): California Department of Managed Health Care and California Department of Insurance

Award Date: September 20, 2011

Grantee: California Department of Insurance

Total Award: $2,162,121

Baseline Award: $1,500,000

Workload Award Amount: $622,121

  • Introduce legislation: California will introduce legislation that would provide prior approval authority over all products and provide for public hearings on health insurance rates.
  • Expand scope of rate review: The California Department of Insurance will use newly-hired staff to shorten the time it takes for reviewing rates, issuing final determinations, and posting and reporting 21 the determinations. This step will provide additional negotiating time to achieve rate reductions where appropriate.
  • Improve rate filing requirements: Guidance, issued in May as a result of the passage of SB 1163, signed by Governor Jerry Brown, sets forth an improved actuarial evaluation process for rate filings that the California Department of Insurance now uses.
  • Improve transparency and consumer interfaces: The California Department of Insurance will provide $75,000 per year in grants to consumer advocacy organizations to also look at rate filings and submit comments to the Department to help improve public input in the rate evaluation process.
  • Hire new staff: The California Department of Insurance hired one Associate Life Actuary with Cycle II grant funding; this position is in addition to the 4 new positions created with Cycle I resources.

Grantee: California Department of Managed Health Care

Total Award: $2,162,121

Baseline Award: $1,500,000

Workload Award Amount: $662,121

  • Expand scope of rate review: The Department will increase data collection to allow for a more in-depth analysis and reporting on collected rate data.
  • Improve rate filing requirements: Guidance, issued in May as a result of the passage of SB 1163 (Passes and effective January 1, 2011), signed by Governor Arnold Schwarzenegger, sets forth an improved actuarial evaluation process for rate filings that the Department of Managed Health Care will now use.
  • Improve transparency and consumer interfaces: The Department of Managed Health Care will work with a consumer advocacy group to gain meaningful input from consumers and stakeholders on rate filings. The Department will post comments gathered by the consumer advocacy group on its website for consumer use.
  • Hire new staff: The Department of Managed Health Care will create 2 new positions with Cycle II Grant funding.
  • Improve IT: The Department of Managed Health Care will continue to build on existing program infrastructure using additional resources to collect, analyze, and report to HHS-critical information about rate review decisions and trends.

Cycle III Grant Application Summary

California Grantee: California Department of Insurance

Award Date: September 23, 2013

Total Award: $5,193,955

Baseline Award Amount: $2,000,000

Workload Award Amount: $3,193,955

  • Improve the Quality and Efficiency of Rate Review: The California Department of Insurance will perform detailed actuarial analyses of rate filings in order to achieve rate adjustments that benefit consumers.
  • Establish Medical Claims Data Collection: The Department of Insurance will use Cycle III funds to contract with an academic institution or other nonprofit organization to establish a database of medical claims data. The dataset will incorporate claims data from private issuers, public payers, and potentially, self-funded plans.
  • Expand and Improve Analysis of Medical Claims Data: California will analyze data contained by the newly established claims database in order to determine the average prices paid for common medical procedures. The state will investigate geographic differences in medical pricing, and analyze pricing data according to the 19 geographic rating areas established for rate review.
  • Increase Health Pricing Transparency: The Department of Insurance will use Cycle III funds to design a consumer-friendly website that presents health pricing and quality information in an integrated manner. The website will be designed to be compatible across multiple platforms and mobile devices.

Cycle IV Grant Application Summary

California Grantee: California Department of Insurance
Award Date: September 19, 2014
Total Award: $589,500

  • Improve the Quality/Efficiency of Rate Review:  The California Department of Insurance will allocate grant funds to continue funding actuarial positions to improve rate review and achieve favorable rate adjustments.
  • Establish or Improve Data Collection: The California Department of Insurance will continue funding project management and contracts with outside consultants to support implementation and oversight of its Data Center project, led by the University of California, San Francisco. California will acquire fair and accurate health pricing and reimbursement data specific to California and reflective of health care costs in the state. Data collection mechanisms include, but are not limited to, licensed commercial claims data, publicly available claims and charge data, and voluntary claims and reimbursement data from payers and providers.
  • Enhance Data Quality: The California Department of Insurance will work with a commercial vendor for data grouping and analytics software (data mapping, linking data sets, data quality audits, validation of measurement and analytic results), data aggregation, specialized provider attribution requirements for quality measurement, and cost and utilization analytics or other purchased services.

California Grantee: California Department of Managed Health Care
Award Date: September 19, 2014
Total Award: $589,500

  • Improve the Quality/Efficiency of Rate Review: The California Department of Managed Health Care will implement best practices to review rate filings against the market as a whole and to ensure that the data used in rate filings is consistent with audited financial statements.
  • IT and Other Technology Based Improvements: The California Department of Managed Health Care plans to hire an IT contractor to assist in the design, development, and implementation of new analytic capabilities to assess the validity of rate increases and improve the IT infrastructure that supports rate review functions.  California will continue to make enhancements to its IT systems to aid consumer use of the website and to ensure compliance with the rate filing and reporting requirements.
  • Improve Rate Review Transparency: The California Department of Managed Health Care will improve public comment functionality on the rate review website. Also, California will improve utilization of SERFF to accommodate health plan submission of rate filings and improve public disclosure.  

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