Section 2026.60  Determination of an Unreasonable Rate Increase

a)         As required by 45 CFR 154.225(a), when the Director receives a Rate Filing Justification for a rate increase subject to review and the Director reviews the rate increase, the Director will make a timely determination whether the rate increase is an unreasonable rate increase, and submit that decision to CMMS.

b)         If the Director determines that the rate increase is unreasonable, CMMS will provide the Director's final determination and brief explanation to the health insurance issuer within five business days following CMMS receipt of the final determination.

c)         The Director's rate review process includes an examination of the following as required by 45 CFR 154.301(a)(3):

1)         The reasonableness of the assumptions used by the health insurance issuer to develop the proposed rate increase and the validity of the historical data underlying the assumptions;

2)         The health insurance issuer's data related to past projections and actual experience;

3)         The reasonableness of assumptions used by the health insurance issuer to estimate the rate impact of the reinsurance and risk adjustment programs under sections 1341 and 1343 of the Affordable Care Act; and

4)         The health insurance issuer's data related to implementation and ongoing utilization of a market-wide single risk pool, essential health benefits, actuarial values and other market reform rules as required by the ACA.

d)         As required by 45 CFR 154.301(a)(4), the examination must take into consideration the following factors, to the extent applicable to the filing under review:

1)         The impact of medical trend changes by major service categories;

2)         The impact of utilization changes by major service categories;

3)         The impact of cost-sharing changes by major service categories, including actuarial values;

4)         The impact of benefit changes, including essential health benefits and non-essential health benefits;

5)         The impact of changes in enrollee risk profile and pricing, including rating limitations for age and tobacco use under PHS Act section 2701;

6)         The impact of any overestimate or underestimate of medical trends for prior year periods related to the rate increase;

7)         The impact of changes in reserve needs;

8)         The impact of changes in administrative costs related to programs that improve health care quality;

9)         The impact of changes in other administrative costs;

10)         The impact of changes in applicable taxes, licensing or regulatory fees;

11)         Medical loss ratio;

12)         The health insurance issuer's capital and surplus;

13)         The impacts of geographic factors and variations;

14)         The impact of changes within a single risk pool to all products or plans within the risk pool; and

15)         The impact of reinsurance and risk adjustment payments and charges under sections 1341 and 1343 of the ACA.