Rate Increase Disclosure and Review, 81004-81029 [2010-32143]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 75, Number 246 (Thursday, December 23, 2010)]
[Proposed Rules]
[Pages 81004-81029]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-32143]



[[Page 81003]]

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Part V





Department of Health and Human Services





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45 CFR Part 154



Rate Increase Disclosure and Review; Proposed Rule

Federal Register / Vol. 75 , No. 246 / Thursday, December 23, 2010 / 
Proposed Rules

[[Page 81004]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 154

[OCIIO-9999-P; Docket No. HHS-OS-2010-0029]
RIN 0950-AA03


Rate Increase Disclosure and Review

AGENCY: Office of Consumer Information and Insurance Oversight (OCIIO), 
Department of Health and Human Services (HHS).

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: This document contains proposed regulations implementing the 
rules for health insurance issuers regarding the disclosure and review 
of unreasonable premium increases under section 2794 of the Public 
Health Service Act. The proposed rule would establish a rate review 
program to ensure that all rate increases that meet or exceed an 
established threshold are reviewed by a State or HHS to determine 
whether the rate increases are unreasonable.

DATES: Send your comments on or before February 22, 2011.

ADDRESSES: All comments will be made available to the public.

    Warning:  Do not include any personally identifiable information 
(such as name, address, or other contact information) or 
confidential business information that you do not want publicly 
disclosed. All comments are posted on the Internet exactly as 
received, and can be retrieved by most Internet search engines. No 
deletions, modifications, or redactions will be made to the comments 
received, as they are public records. Comments may be submitted 
anonymously.

    In commenting, please refer to file code OCIIO-9999-P. Because of 
staff and resource limitations, we cannot accept comments by facsimile 
(FAX) transmission.
    You may submit comments using any of the following methods (please 
choose only one of the ways listed):
     Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
     Mail. You may mail written comments to the following 
address ONLY: Office of Consumer Information and Insurance Oversight, 
Department of Health and Human Services, Attention: OCIIO-9999-P, Room 
445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201. Please allow sufficient time for mailed comments 
to be received before the close of the comment period.
     Hand or Courier. If you prefer, you may deliver (by hand 
or courier) your written comments before the close of the comment 
period to the following address: Office of Consumer Information and 
Insurance Oversight, Department of Health and Human Services, 
Attention: OCIIO-9999-P, Room 445-G, Hubert H. Humphrey Building, 200 
Independence Avenue, SW., Washington, DC 20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the OCIIO drop slots located in the main lobby of the building. A 
stamp-in clock is available for persons wishing to retain a proof of 
filing by stamping in and retaining an extra copy of the comments being 
filed.)
    Comments mailed to the address indicated as appropriate for hand or 
courier delivery may be delayed and received after the comment period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by following the 
instructions at the end of the ``Collection of Information 
Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the ``ADDITIONAL INFORMATION'' section.

FOR FURTHER INFORMATION CONTACT:
    For questions concerning this proposed rule, contact Sally McCarty, 
Office of Consumer Information and Insurance Oversight, Department of 
Health and Human Services, by phone at (301) 492-4489 OR by e-mail at 
ratereview@hhs.gov.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: https://regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Table of Contents

I. Background
II. Provisions of the Proposed Rule
    A. Introduction and Overview
    B. Definitions (Sec.  154.102)
    C. Applicability (Sec.  154.103)
    D. Rate Increases Subject to Review (Sec.  154.200)
    E. Review of Rate Increases Subject to Review by HHS or by a 
State (Sec.  154.210)
    F. Effective Rate Review Program (Sec.  154.301)
    G. Unreasonable Rate Increases
    H. Issuer Disclosure Required Under Part 154
III. Collection of Information Requirements
IV. Response to Comments
V. Regulatory Impact Analysis

I. Background

    The Patient Protection and Affordable Care Act (Pub. L. 111-148), 
was enacted on March 23, 2010; the Health Care and Education 
Reconciliation Act (Pub. L. 111-152), was enacted on March 30, 2010. In 
this preamble we refer to the two statutes collectively as the 
Affordable Care Act. The Affordable Care Act reorganizes, amends, and 
adds to the provisions of Part A of title XXVII of the Public Health 
Service Act (PHS Act) relating to group health plans and health 
insurance issuers in the group and individual markets.
    The Department of Health and Human Services (HHS or the Department) 
is issuing regulations in several phases in order to implement 
revisions to the PHS Act made by the Affordable Care Act. Most of the 
previous regulations were issued jointly with the Departments of Labor 
and the Treasury. A request for comments relating to the medical loss 
ratio (MLR) provisions of PHS Act section 2718 was published in the 
Federal Register on April 14, 2010 (75 FR 19297) (notice, or request 
for comments). A request for comments relating to the premium review 
provisions of PHS Act section 2794 was also published by HHS in the 
Federal Register on April 14, 2010 (75 FR 19335) (notice, or request 
for comments). Additionally, a series of interim final regulations were 
published earlier this year implementing PHS Act provisions added by 
the Affordable Care Act. Specifically, interim final rules were 
published implementing (1) section 2714 (requiring dependent coverage 
of children to age 26) (75 FR 27122 (May 13, 2010)); (2) section 1251 
of the Affordable Care Act (relating to status as a grandfathered 
health plan) (75 FR 34538 (June 17, 2010)); (3) sections 2704 
(prohibiting preexisting condition exclusions), 2711

[[Page 81005]]

(regarding lifetime and annual dollar limits on benefits), 2712 
(regarding restrictions on rescissions), and 2719A (regarding patient 
protections) (75 FR 37188 (June 28, 2010)); (4) section 2713 (regarding 
preventive health services) (75 FR 41726 (July 19, 2010)); (5) section 
2719 (regarding internal claims and appeals and external review 
processes) (75 FR 43330 (July 23, 2010)). HHS published interim final 
regulations implementing PHS Act section 2718 (regarding medical loss 
ratio (75 FR 74864 (December 1, 2010)). HHS, Department of Labor, and 
Department of the Treasury also published an amendment to the interim 
final regulations relating to status as a grandfathered health plan 
(regarding change in health insurance issuers) in the Federal Register 
on November 17, 2010 (75 FR 70114). The Departments have also published 
sub-regulatory guidance regarding various issues related to the 
implementation of the Affordable Care Act, available at https://www.dol.gov/ebsa and https://www.hhs.gov/ociio.
    These proposed regulations are being published to implement section 
2794 of the PHS Act, relating to the disclosure and review of 
unreasonable premium increases.\1\
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    \1\ There are two sections numbered 2794 in the Public Health 
Service Act. The Section 2794 that is the basis for this rule is 
entitled ``Ensuring That Consumers Get Value For Their Dollars.''
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II. Provisions of the Proposed Rule

A. Introduction and Overview

    Section 1003 of the Affordable Care Act adds a new PHS Act section 
2794 which directs the Secretary, in conjunction with the States, to 
establish a process for the annual review of ``unreasonable increases 
in premiums for health insurance coverage.'' The statute provides that 
this process shall require health insurance issuers to submit to the 
Secretary and the applicable State a justification for an unreasonable 
premium increase prior to the implementation of the increase.
    The review process required under section 2794 does not preempt or 
supplant any existing State laws or processes governing the review of 
insurance premiums, including any State authority to prevent the 
implementation of unreasonable rates. Many States' laws already provide 
that rates may not be approved, or may not remain in effect, if they 
are excessive or unreasonable in relation to the benefits provided or 
fail to satisfy other statutory standards. Specifically, our review of 
State law indicates that 43 of the 50 States currently have some rate 
review process, in either the individual or small group markets, or 
both.
    This proposed regulation recognizes the traditional role of the 
States in regulating insurance rates and builds on existing State-based 
rate review processes. In circumstances where HHS is reviewing rates 
rather than a State, which we believe will be a minority of States that 
have not yet established effective rate review programs as discussed 
below, a determination by HHS that a rate increase is ``unreasonable'' 
under section 2794 would not prevent any health insurance issuer from 
implementing a rate increase permitted by State law. In this regard, 
this proposed regulation preserves the opportunity for insurers to 
implement a proposed rate that is consistent with State law. Moreover, 
the process established by this proposed regulation would not result in 
any delay in an issuer's ability to implement a proposed rate increase. 
In other words, the requirements of Section 2794 only supplement and 
complement, rather than supplant, and do not interfere with, existing 
State laws and processes for rate review.
    Section 2794 of the PHS Act directs the Secretary, in conjunction 
with the States, to establish a process for the annual review of 
unreasonable increases in ``premiums.'' ''Premium'' is the final amount 
charged to a specific insured. For those States that currently review 
proposed increases in ``premiums,'' it is the underlying rates and 
methods that are the subject of the actuarial review conducted by these 
States.
    To determine rates for a specific insurance product, the issuer 
must estimate future claims costs in connection with that product and 
then the revenue needed to pay anticipated claims and non-claims 
expenses, such as administrative expenses including profits. The costs 
that will be incurred and the revenue that will be received are not 
known at the time the rate is established (indeed, the number of people 
that will be covered by the product is not known), so the rates must be 
based on an actuarial estimate of these costs and of the non-claims 
expenses. It is these estimates, along with the methodology used to 
determine them, that are the subject of the actuarial review conducted 
by States that have authority to review premium or rate increases.
    Once the overall amount of revenue needed is established, the 
premium that will be charged to specific insureds is determined. 
Generally, the premium charged will vary depending on characteristics 
such as age, geography, and in the individual market in many States, 
health status. It will also vary based on choices made by the insured, 
such as the amount of deductibles and co-pays. The criteria that may be 
used and the differences in premium that may be charged are determined 
by State law.
    This proposed regulation, therefore, provides a process for the 
review of unreasonable rate increases, based upon the practice in 
States that conduct effective reviews of the cost of health insurance 
coverage.
    Section 2794 of the PHS Act does not define what makes a rate 
increase ``unreasonable,'' nor does it specify the process that should 
be used for determining whether a particular rate increase is 
unreasonable (requiring that a review be conducted and a justification 
submitted). Therefore, this proposed regulation provides a definition 
of an ``unreasonable'' rate increase, and outlines a process that would 
be used by HHS when reviewing rate increases to determine which rates 
are subject to review and among them which are ``unreasonable.''
    We considered two types of processes that arguably could satisfy 
the requirement in 2794 that unreasonable rates be reviewed. One would 
establish, by regulation, a standard of unreasonableness, based on some 
criteria other than an actuarial standard or actual review. For 
example, any rate increase exceeding the average increase for similar 
products during the previous year, or any rate increase exceeding a 
rate of inflation of medical costs by a specific amount, could be 
deemed to be unreasonable. Under this approach, any rate increase over 
a pre-determined percentage would be considered ``unreasonable'' and 
therefore subject to review. However, while consumers may view any 
large increase in the cost of their health insurance coverage to be 
``unreasonable,'' it is not possible to know whether an increase is 
``unreasonable'' from an actuarial standpoint until the proposed 
increase, and the underlying assumptions, have been the subject of 
actuarial analysis. Moreover, while such an approach may be relatively 
easy to administer, for the reasons stated above it almost certainly 
would label as ``unreasonable'' rate increases that are not 
unreasonable from an actuarial standpoint. This point was made in 
numerous comments received in response to the Request for Comments 
published on April 14, 2010 in the Federal Register (75 FR 19335). 
Those comments suggest that HHS should not establish a definition of an 
unreasonable rate increase by, for example, providing that all rate 
increases greater than a specified

[[Page 81006]]

percentage would be deemed to be unreasonable.
    In addition, this ``literal'' reading under which rates are deemed 
``unreasonable'' at the outset, in the absence of review, would make 
any ``review'' process meaningless, as the outcome of any review (that 
is, whether the rate was ``unreasonable'') would have been pre-
determined.
    This proposed regulation instead proposes an alternative approach 
that is consistent with the language of section 2794; is more narrowly 
focused on what we interpret to be the purpose of that section; and 
would not involve the anomaly of ``pre-determining'' the reasonableness 
of a rate before it has been reviewed. Under this approach, if a 
proposed rate increase equals or exceeds a defined threshold, it would 
be considered ``subject to review.'' The review process would then 
determine if the increase is, in fact, unreasonable. This approach 
interprets the statutory ``process'' for reviewing unreasonable rate 
increases as a process under which rates that may ultimately be 
determined to be unreasonable are reviewed. Under this interpretation, 
identifying potentially unreasonable rates for review is reasonably an 
element of a broader process for the review of proposed rate increases.
    Rates above the threshold would not be deemed or otherwise 
determined to be unreasonable in advance of this review. As discussed 
below, for rate increases filed in a State on or after July 1, 2011, or 
effective on or after July 1, 2011 in a State that does not require a 
rate increase to be filed, the threshold for whether rates are subject 
to review would be whether the average weighted increase in the rate 
filing, alone or in combination with prior increases in the preceding 
12 month period, is 10 percent or more.
    In establishing the 10 percent threshold for determining which 
rates are subject to review, HHS has balanced the wide range of 
available data on rate and medical trend increases. HHS reviewed 
available data and literature on insurance rate increases in States and 
general trends in health care costs. HHS reviewed each State's 
applicable Web site, and determined that the information related to 
rate trends posted on these Web sites is limited. Our review of the 
limited data available suggests that the majority of increases in the 
individual market exceeded 10 percent each year for the past 3 years.
    These yearly increases significantly exceed some national measures 
of medical cost inflation, such as the medical component of the 
Consumer Price Index, whose inflation has typically ranged from 3.7 
percent to 4.4 percent. The Centers for Medicare and Medicaid Services' 
National Health Expenditures (NHE) data is another measure of health 
care cost trends based on overall national health care spending. The 
five most recent years of available NHE data suggest that overall 
health care expenditures have increased at an annual rate between 4.4 
percent to 6.9 percent. Some commenters suggested using these indices 
as thresholds for a review of rate increases. Another national index, 
the Standard & Poor's Healthcare Economic Commercial Index, also 
measures insurance rate trends. The S & P Index measures trends in 
provider claims costs, which encompasses both unit cost and utilization 
changes; the trend in that index from September 2009 to September 2010 
was 8.5 percent.
    The 10 percent threshold established in this regulation exceeds 
these major indices and in doing so balances industry concerns that any 
threshold would be over-inclusive with the competing concern that it 
would subject to review too few rates that may be unreasonable. As we 
discuss below, when better and more specific data on trends in 
insurance rates in individual States can be collected, State-specific 
thresholds would be established.
    This approach does not provide for the review of every proposed 
rate increase, no matter how small, to determine whether it is 
unreasonable. We recognize that the choice of any threshold makes it 
inevitable that unreasonable rate increases below the threshold will 
not be reviewed, and that a proposed increase of less than 10 percent 
would be unreasonable if the actuarial assumptions underlying the 
increase were invalid or unreasonable. In proposing this approach, HHS 
also has taken into consideration the fact that many States, as 
discussed below, conduct a rate review process for all rate increases 
without regard to the magnitude of the increase. We expect the number 
of States conducting such reviews to increase in light of additional 
resources provided under the rate review grants and passage of State 
legislation. Therefore, as a practical matter, in a growing number of 
States, there is even less likelihood that an unreasonable increase 
below the threshold would be implemented.
    In this regulation, HHS proposes an approach that balances the 
regulatory burdens that would be imposed on both the agency and the 
industry if every rate increase, no matter how small, were to be 
reviewed for unreasonableness against the potential harm to consumers 
should a small, but unreasonable, increase not be reviewed and the 
issuer not be required to provide a final justification for the 
increase. We invite comments on whether 10 percent is a reasonable 
threshold to apply in determining which rate increases will be subject 
to review.
    In establishing an initial 10 percent threshold for whether a rate 
increase is subject to review, as discussed below, HHS recognizes that 
rates, underlying costs, and health care trends vary from State to 
State. Many factors influence the magnitude and frequency of increases 
in the States, and a single, national filing threshold does not reflect 
all of the local variations. As a consequence, HHS would propose, for 
future calendar years, to establish State-specific thresholds for each 
future calendar year by September 15th of the prior year. In 
determining each State-specific threshold, HHS would consider the 
State-specific data submitted for each rate increase subject to review, 
and also the State-specific data received by HHS from those States that 
have received ``premium review grants'' under section 2794(c) of the 
PHS Act. To the extent that a State insurance regulator has other data 
that could serve as the basis for a State-specific threshold, that 
would be considered as well.
    As discussed below, the State-specific threshold would be based on 
the same analysis used to develop the initial 10 percent threshold, but 
would be based on data from the specific State, rather than the 
national data we analyzed in selecting the proposed 10 percent figure.
    In response to the Request for Comments, many commenters also 
suggested that the rate review process should not apply to rate 
increases in the large group market. Currently, our review of State law 
indicates that only 18 States have authority to review rates for all or 
part of the large group market. Applying this regulation to the large 
group market would result in a process that is not closely aligned with 
most State processes upon which the regulation is modeled. In addition, 
many issuers are not accustomed to submitting proposed rate increases 
for review in this market. Finally, purchasers in the large group 
market have greater leverage than those in the individual and small 
group markets, and therefore may be better able to avoid imposition of 
unreasonable rate increases. For these reasons, under this proposed 
regulation, rates in the large group market would not be subject to the 
rate review process we are proposing. HHS solicits specific comments on 
whether, in the future, if rate increases in the large group market 
were subject to a review process under

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section 2794, if that process should differ from the process provided 
for in this proposed regulation for the individual and small group 
markets.
    In recognition of the primary role States have in reviewing rates 
today, HHS would defer to the definitions used under applicable State 
rate filing laws when determining whether a rate filing relates to 
health insurance coverage offered in the individual market, small group 
market, or large group market, where such laws differ from the 
definitions of these terms in the PHS Act. HHS believes that deferring 
to the definitions employed in State rate filing laws ensures that the 
rate review process under this proposed regulation would not disrupt 
current State rate filing and review practices; however, we are 
soliciting public comment on alternative approaches. We note that this 
is solely for rate filing purposes. Federal law distinctions in the 
Affordable Care Act regarding group size apply for all other purposes 
unless otherwise specified. As discussed below, where State rate 
filings laws do not contain definitions of small and large group 
markets, we propose to employ the definitions in the Public Health 
Service Act, with the caveat that the number used for a cut-off between 
small and large groups would remain at 50 employees, as is currently 
the case in all States, even though States have the option of using 100 
employees prior to 2016, and a 100 employee cut-off would be used after 
that date.
    Rate increases for health insurance coverage for ``excepted 
benefits,'' as described in paragraph (1) of subsection (c) of section 
2791 of the PHS Act, or in paragraphs (2), (3) or (4) of such 
subsection, if the benefits are provided under a separate policy, 
certificate of contract of insurance, would also be exempted from 
review under this proposed regulation. Excepted benefits, such as 
dental and vision, do not appear to be a principal focus of the 
Affordable Care Act, and the regulatory burden that would be imposed on 
the industry and HHS would not justify reviewing rate increases for 
these benefits.
    All rate increases that meet or exceed the 10 percent threshold 
would be reviewed, by the relevant State, or by HHS in the smaller 
number of cases where States do not yet have an effective process in 
place. The proposed regulation would use the definition of States set 
forth in section 2791(d)(14) of the PHS Act, which defines States to 
include each of the several States, the District of Columbia, Puerto 
Rico, the Virgin Islands, Guam, American Samoa, and the Northern 
Mariana Islands. Consistent with the statutory requirement in section 
2794 that the rate review process be established ``in conjunction with 
the States,'' the proposed regulation provides that HHS would adopt a 
State's determination of whether a rate increase is unreasonable if the 
State has an effective rate review program for rates filed in a 
particular market. This element of the proposed regulation preserves 
the primary role States have today in reviewing rates. So long as a 
State can conduct an effective review of proposed rate increases that 
meet or exceed the applicable threshold, State determinations will be 
adopted by HHS.
    HHS expects that a significant majority of States would currently 
meet the standards for having an effective review process in one or 
both of the individual or small group markets, and we anticipate the 
remainder would likely establish an effective rate review process as 
they obtain needed statutory authority or implement new or enhanced 
review procedures. More than 10 States indicated in their applications 
for rate review grants they would be seeking additional legislative 
authority to enhance their existing processes.
    HHS would evaluate whether a State has an effective rate review 
program based on four main factors, all of which currently represent 
the best practices among the many States which conduct review today. 
The first factor is whether the State receives from health insurance 
issuers' data and documentation sufficient to determine whether a rate 
increase is unreasonable. As noted above, many States have these 
provisions today. The second factor is whether the State effectively 
reviews the data and documentation submitted by health insurance 
issuers in support of a rate increase. The third factor is whether the 
State review examines the reasonableness of the assumptions used by the 
issuer in developing its rate proposal and the historic data underlying 
those assumptions. The proposed regulation also describes the areas of 
analysis that a State's review would be required to include in order 
for it to be deemed effective. The fourth factor is whether the State 
applies a standard set forth in statute or regulation when making the 
determination of whether a rate increase is unreasonable. This proposed 
regulation does not establish a standard for unreasonableness that a 
State must use or apply; nor does it require a numerical standard to be 
applied under State law to determine whether a rate increase is 
unreasonable. Rather, a State regulator would apply the applicable 
standards that exist under State law. Finally, we are soliciting public 
comment on whether the public's ability to comment on unreasonable rate 
increases during the review process should be considered as one 
criterion for an effective rate review program.
    As noted above, section 2794 does not provide a definition of 
``unreasonable'' rate increases. The proposed regulation provides that 
States would apply the standards set forth in State law or regulation 
when determining whether a rate increase is unreasonable. As mentioned 
above, many States' laws provide that rates may not be approved, or may 
not remain in effect, if they are excessive or unreasonable in relation 
to the benefits provided or fail to satisfy other statutory standards. 
Specifically, our review of States' laws indicates that 43 of the 50 
States currently have some rate review process in either the individual 
or small group markets, or both. 16 States and the District of Columbia 
explicitly prohibit insurance rates from being excessive, inadequate, 
or unfairly discriminatory. In addition, 13 States prohibit rates from 
being both unreasonable in relation to the benefits provided and 
excessive, inadequate, or unfairly discriminatory. Finally, an 
additional 14 States prohibit rates from being unreasonable in relation 
to the benefits provided. For the remaining 8 States, we did not 
identify any explicit statutory standards that address the 
unreasonableness of rates; however, these States may use other legal 
tools available to regulate unreasonable rates. In addition, based on 
the rate review grant applications, some Territories either have a rate 
review process in place today, or expect to implement a process in the 
future.
    When a State with an effective rate review program determines 
whether a rate increase violates the standards set forth in State law 
and therefore whether the increase is unreasonable, HHS would adopt 
that determination and would not conduct an independent review of the 
State's determination. Given this proposed regulation, and the rate 
review grants made available to States under Section 2794 of the PHS 
Act, it is likely that, as States gain rate review authority and 
improve their rate review programs, the number of States in which HHS 
would be conducting reviews would diminish over time.
    For rate increases filed in markets for which a State does not have 
an effective rate review process, HHS would conduct a review of the 
proposed rate increases to determine whether they are unreasonable 
until such time as the State implements an effective review process in 
that market. This proposed regulation provides that where HHS conducts 
rate reviews, the standard for

[[Page 81008]]

unreasonable would be whether the rate increase is ``excessive,'' 
``unjustified,'' or ``unfairly discriminatory.'' The proposed 
regulation lists the factors that HHS would consider when determining 
if a rate increase is excessive, unjustified or unfairly 
discriminatory, and therefore, unreasonable.
    Consistent with the statutory requirement that a ``justification'' 
be filed before an unreasonable rate may be implemented, the regulation 
also proposes to require that for rate increases that are subject to 
review (because they meet or exceed the 10 percent review threshold), a 
preliminary justification would have to be submitted to the applicable 
State in which the increase is proposed to be implemented, as long as a 
State accepts such submissions, and to HHS. The regulation sets out the 
proposed contents of the preliminary justification. The preliminary 
justification would be divided into three parts, each part having a 
different purpose. The proposed regulation would require health 
insurance issuers to complete parts one and two of the preliminary 
justification, regardless of whether a State or HHS is reviewing the 
rate increase. The information that would be contained in parts one and 
two of the preliminary justification is intended to provide consumers 
with a description of the rate increase and the factors contributing to 
the increase, including both a descriptive and a quantitative analysis.
    The information required to be provided in the preliminary 
justification supplements, and does not conflict with, State laws 
specifying what issuers must file with the State when they propose to 
increase rates. Those laws continue to govern what the issuer must file 
with the State, and would be unaffected by this proposed regulation and 
the requirement that the preliminary justification must be filed with 
HHS.
    When HHS is reviewing a rate increase, issuers would be required to 
submit the additional data required under part three of the preliminary 
justification in order to allow HHS to conduct a comprehensive 
actuarial review of the increase. The specific data reporting 
requirements in part three of the preliminary justification are modeled 
on the actuarial memorandum guidelines included in NAIC Model 
Regulation 134-1. In the event the level of detail provided by a health 
insurance issuer does not provide a sufficient basis for HHS to review 
a rate increase, HHS would request from the health insurance issuer the 
additional information necessary to complete its review.
    Parts one and two of the preliminary justification would promptly 
be posted to the HHS Web site so that insurance consumers are on notice 
of proposed increases and have basic information about the factors the 
issuer asserts are causing the increase. HHS will also post on its Web 
site before any information contained in part three of the preliminary 
justification that has not been designated as ``confidential'' as 
defined in HHS's Freedom of Information Act regulations, 45 CFR Sec.  
5.65. HHS will make a determination as to whether to post information 
designated as ``confidential'' under the standards and procedure set 
forth in those regulations, and will post that information only after 
making a determination that it is subject to disclosure as provided by 
those regulations.
    If HHS reviews a rate increase and determines it to be 
unreasonable, HHS would provide its final determination to the health 
insurance issuer. If the issuer chooses not to implement the 
unreasonable rate increase, or to implement a lower increase than it 
had proposed and such lower increase is below the applicable subject to 
review threshold, the issuer would be required to provide a final 
notification to this effect to HHS. If the issuer chooses to implement 
a lower increase but the lower increase is above the applicable subject 
to review threshold, the lower increase would be subject to review and 
the issuer would be required to submit a new preliminary justification. 
If the issuer implements an unreasonable rate increase, it would have 
to provide to HHS a final justification in response to HHS's 
determination of unreasonableness. HHS would post its final 
determination and the issuer's final notification or final 
justification on its Web site. If the issuer chooses to implement the 
rate increase, it would be required to post its preliminary 
justification, HHS's determination and its final justification on its 
Web site.
    One of the elements of an effective rate review program, discussed 
more fully below, is that the State's review would include an analysis 
of certain specific factors set forth in this proposed regulation and 
which are based on the common practices that States employ today. In 
addition, the State would provide to the issuer and to HHS its 
determination of whether a rate increase is unreasonable, along with an 
explanation of how its analysis of the factors set forth in the 
proposed regulation caused it to arrive at that determination. HHS 
would adopt determinations made by States with effective rate review 
programs. When HHS has adopted a State's determination as to whether a 
rate increase is unreasonable, HHS would post the State's final 
determination on its Web site, together with the issuer's final 
justification in the event that the issuer chose to implement a rate 
increase that was determined to be unreasonable by the State.

B. Definitions (Sec.  154.102)

    The proposed regulation provides the following key definitions that 
would apply to the rate review process used by HHS, and to its 
determination regarding whether a rate increase is unreasonable. The 
definitions are discussed here because they are unique to this 
regulation or may be of particular interest to enrollees, health 
insurance issuers, consumers, regulators, and others. Defined terms 
that conform to definitions commonly used in the health insurance 
industry, such as ``insurance,'' or that have already been defined in 
Federal law, are not discussed here.
1. Individual Market and Small Group Market
    As discussed above, in order to ensure that the rate review process 
outlined in the proposed regulation is consistent with the process used 
by States in performing rate reviews, and in order to avoid any 
disruption to the current State rate filing and review practices, the 
definitions of ``individual market'' and ``small group market'' would 
be defined as they are under the applicable State's rate filing laws, 
if such laws include such definitions. For example, several States 
define a small group to include 2 to 25 employees for rating purposes, 
and the small group rating requirements in these States do not apply to 
groups with 26 or more employees. Further, certain States consider 
association plans to be large employers for rating purposes. In such 
circumstances, and only for this purpose, HHS would defer to applicable 
State law when determining whether a rate increase in that State 
relates to the small group market. For all other purposes the 
definitions set forth in the PHS Act govern as applicable.
    In addition, for purposes of rate review under this regulation 
only, if the State rate filing law does not include a definition of 
small or large group, the definition under the PHS Act would be used, 
except that a small group would be defined to include 1 to 50 
employees. Currently, under the Affordable Care Act definitions, States 
have the option until 2016 of using 50 or 100 as the cutoff for a small 
group, with 100 applying after that date, and all States have elected 
the 50 option. Thus, if

[[Page 81009]]

there are no definitions of small and large group in a State's rate 
filing law, this proposed regulation would define ``small group'' to 
include 1 to 50 employees.
2. Unreasonable Rate Increase
    The proposed regulation defines a rate increase as ``unreasonable'' 
if it is ``unjustified,'' ``excessive,'' or ``unfairly 
discriminatory,'' as these terms are more fully described in Sec.  
154.205, but this proposed definition would apply only to rate 
increases that are reviewed by HHS, and would not create a Federal 
standard for States to use when determining whether a rate increase is 
unreasonable. These terms are described consistently with the standards 
that are most commonly used by States to identify rate increases that 
are not in compliance with State law.
    Since HHS would be adopting the determinations of States with an 
effective rate review program, the proposed regulation includes in the 
definition of ``unreasonable rate increase,'' those rate increases that 
have been determined by a State to be excessive, unjustified, unfairly 
discriminatory or otherwise unreasonable under applicable State law. 
Accordingly, a State with an effective review program would be 
permitted to use any applicable standards set forth in statute or 
regulation for determining whether a rate increase that is subject to 
review is unreasonable. This serves to preserve and recognize existing 
State laws relating to unreasonable rates. HHS recognizes that factors 
other than those addressed in the proposed regulation may be viewed as 
potentially impacting the reasonableness of a rate, including the 
structure and competitiveness of the market, and we are therefore 
soliciting public comment to identify these factors and whether they 
should be considered in determining whether a rate increase is 
unreasonable.

C. Applicability (Sec.  154.103)

    The requirements of this proposed regulation would generally be 
applicable to all health insurance issuers offering small group or 
individual health insurance coverage in a State.
    Section 2794 of the PHS Act does not apply to grandfathered health 
plan coverage (See 45 CFR 147.140 (75 FR 34538, June 17, 2010, as 
amended by 75 FR 70114, November 17, 2010)), so these proposed 
regulations similarly would not apply to such coverage.
    In addition, insurance coverage that meets the ``excepted 
benefits'' definition set forth in section 2791(c) of the PHS Act and 
45 CFR 144.103 would not be subject to these proposed regulations. 
While ``excepted benefits'' are not explicitly exempt from section 2794 
of the PHS Act, they are exempt from other provisions of the PHS Act, 
as added by the Affordable Care Act. ``Excepted benefits'' do not 
appear to be the focus of the rate review provisions of the Affordable 
Care Act. Therefore, the proposed regulation would exempt ``excepted 
benefits,'' to allow for the consistent administration of the PHS Act 
with respect to these defined benefits.
    While HHS recognizes that the rate review provisions of section 
2794 of the PHS Act do not specify to which particular segments of the 
insurance market the rate review provisions apply, and contain no 
specific exclusion for the large group market, HHS proposes that these 
provisions should only apply to the small group and individual market 
at this time. The significant majority of States focus their efforts on 
review of rates within the small group and individual markets. 
Purchasers in the large group market are viewed as more sophisticated 
purchasers, who may have greater leverage and therefore better ability 
to avoid the imposition of unreasonable rate increases, also mitigating 
the need for more active regulation. Many States have limited authority 
over the large group market, so under the framework set out in this 
regulation, few States could satisfy the standards for an effective 
review process in the large group market. Taking these factors into 
consideration, as noted above, these proposed regulations would not 
apply to the large group market. HHS may, however, revise these 
regulations at a future date to cover such plans, and solicits specific 
comments on whether, in the future, if rate increases in the large 
group market were subject to a review process under Section 2794, that 
process should be different than the one provided for in this 
regulation for the small and individual group markets.
    Although section 2794 of the PHS Act directs that implementation of 
the annual rate review process begin with the 2010 plan year, the rate 
review process established in the proposed regulation would begin 
implementation with rate increases filed in a State on or after July 1, 
2011, or effective on or after July 1, 2011 in a State that does not 
require rate increases to be filed, due to several factors. At the time 
that the Affordable Care Act amendments to the PHS Act first became 
effective, on March 23, 2010, many health insurance issuers had already 
implemented rate increases for the 2010 plan or policy year, and many 
more had taken necessary steps to implement increases in the immediate 
months that followed. Since that time, in fulfilling the statute's 
directive that an effective rate review program be developed in 
conjunction with the States, the National Association of Insurance 
Commissioners (NAIC) has been working to develop appropriate reporting 
and disclosure mechanisms, and HHS has provided input into this 
development process. HHS also deemed it appropriate to solicit public 
comments prior to the promulgation of this proposed regulation, through 
the Request for Comments published on April 14, 2010. Finally, this 
regulation is being issued in proposed form, with opportunity for 
further comments which specifically address this proposed regulation. 
Therefore, as noted, the rate review process outlined in this proposed 
regulation would begin with rate increases filed in a State on or after 
July 1, 2011 or effective on or after July 1, 2011 in a State that does 
not require rate increases to be filed.

D. Rate Increases Subject To Review (Sec.  154.200)

1. Applicable Threshold for Rate Increases Subject To Review
    As explained previously, while section 2794 of the PHS Act directs 
the Secretary to establish a process for the annual review of 
unreasonable increases in ``premiums,'' HHS has interpreted this as 
referring to the underlying ``rates'' that are used to develop the 
premiums. This is consistent with how these terms are most commonly 
used by State regulators and the insurance industry. Often, the rate 
review process performed by States is one that reviews changes to the 
rating structure for a plan or policy, as opposed to premium increases 
within the plan or policy that are derived from the underlying rating 
structure. Therefore a ``rate increase'' alters the underlying rate 
structure of a policy form, while a ``premium increase'' can occur even 
without any increase (or change) to the underlying rate structure. For 
example, for policies that are age-rated, as the duration of the policy 
advances, premium changes that correlate with age bands are not ``rate 
increases,'' since they do not change the underlying rate structure. 
For these reasons, the term ``rate'' is used instead of the statutory 
term ``premium'' throughout the text of the proposed regulation.
    Since it is not possible under the provisions of this proposed 
regulation to know before conducting a review of a proposed rate 
increase whether it is ``unreasonable,'' the process that would

[[Page 81010]]

be established must provide for the review of a range of proposed rate 
increases, some of which ultimately would be determined to be 
unreasonable, while others would not. This proposed regulation 
therefore provides that for health insurance coverage offered in the 
individual or small group market all proposed rate increases above the 
defined threshold would be ``subject to review.'' In establishing a 
threshold for rate increases subject to review, the Secretary has 
balanced the need to set a standard that would effectively capture 
unreasonable increases, while avoiding unnecessary filing burdens for 
health insurance issuers with regard to increases that are likely to be 
reasonable.
    The review of a rate increase subject to review, and the 
determination of whether the rate increase is unreasonable, must take 
into account the unique experience of a health insurance product and 
cannot be subject to a simple, fixed value. Therefore, under the 
proposed rule, a rate increase that is subject to review would not be 
per se unreasonable. For 2011, the threshold for whether a rate 
increase is subject to review is a rate increase of 10 percent or more. 
This applies not only to a single rate increase, but also to multiple 
rate increases of less than 10 percent that, when added to one or more 
previous increases within the preceding 12 month period, total 10 
percent or more.
    In establishing the 10 percent threshold, as noted earlier, HHS 
reviewed available data and literature on insurance rate increases in 
States and general trends in health care costs. HHS reviewed each 
State's applicable Web site, and determined that the information 
related to rate trends posted on these Web sites is limited. A small 
number of States make available data on rate increases in different 
insurance market segments in that State. Our review of this data 
suggests that the majority of increases in the individual market 
exceeded 10 percent each year for the past 3 years. Trends are slightly 
lower in the small group market, but over 40 percent of increases still 
exceeded 10 percent. In fact, in the States examined, rate increases in 
the individual market and small group market typically exceeded 15 
percent. These yearly increases significantly exceed some national 
measures of medical cost inflation, such as the medical component of 
the Consumer Price Index, whose inflation has typically ranged from 3.7 
percent to 4.4 percent. The Centers for Medicare and Medicaid Services' 
National Health Expenditures (NHE) data is another measure of health 
care cost trends based on overall national health care spending. The 
five most recent years of available NHE data suggest that overall 
health care expenditures have increased at an annual rate between 4.4 
percent to 6.9 percent. Commenters point out that the factors which 
account for the NHE or the medical component of the CPI are different 
than the various components that account for increases in insurance 
rates. For example, the medical component of CPI does not take into 
account utilization of health care services, or the risk profiles of 
specific populations but is instead based on prices for certain 
services provided to the general population. Health insurance rates are 
affected, not only by the prices charged by the providers of health 
care services, but also by changes in the rate at which those services 
are accessed and the characteristics of the group covered by the 
insurance. Another national index, the Standard & Poor's Healthcare 
Economic Commercial Index, also measures insurance rate trends. The S & 
P Index measures trends in provider claims costs, which encompasses 
both unit cost and utilization changes; the trend in that index from 
September 2009 to September 2010 was 8.5 percent.
    In establishing a 10 percent threshold for determining which rates 
are subject to review, HHS has balanced the wide range of available 
data on rate and medical trend increases. If, for example, the NHE or 
medical component of the CPI represented an accurate measure of 
insurance rate trends, then a threshold for review could be established 
consistent with those indices under the theory that rate increases in 
line with those trends were reasonable because they tracked medical 
cost trends generally, and increases that exceed those measures are 
more likely to be unreasonable. However, since neither of those 
particular measures captures the many factors that affect insurance 
rates, using those measures as a threshold for reviewing rates under 
section 2794 would be over-inclusive. Under that approach, rather than 
capturing potentially unreasonable or excessive rate increases, almost 
all rate increases would be subject to review. Such a result would not 
be consistent with the intent of section 2794. For these reasons, a 10 
percent threshold is a reasonable accommodation between the observed, 
but limited data available regarding trends in rate increases in the 
States, and the available but not precisely comparable data on general 
trends in health care costs and spending, and recognizes that other 
factors may justify a larger rate increase.
    As noted earlier, the Secretary would seek to establish a State-
specific threshold for each future calendar year no later than 
September 15th of the preceding calendar year, beginning in 2011, 
provided applicable State-specific trend data is available. If a State-
specific threshold is not established by the Secretary for an 
applicable calendar year, the 10 percent threshold would continue to 
apply.
    A State-specific threshold, to the extent it can be developed, 
would be based on the same kind of analysis used in establishing the 
proposed 10 percent threshold, but would account for State-specific 
variations in rate increases based on the cost of health care, 
utilization patterns, and other factors affecting health insurance 
rates in a State. HHS would use trend data and other information made 
available to HHS from States receiving premium review grants and 
through the reporting and notification requirements of this proposed 
regulation to develop State-specific thresholds, when possible.
    In developing the 10 percent threshold, the Secretary considered 
the level of aggregation that should apply when determining whether a 
rate increase meets or exceeds the threshold, and the Secretary 
received numerous comments on this issue. Comments received from 
issuers, the American Academy of Actuaries, and industry groups 
proposed the use of a higher level of aggregation of multiple policy 
forms to improve statistical credibility. Typically, this aggregation 
occurs within a market segment. Consumer groups, on the other hand, 
generally favored lower levels of aggregation. Finally, various State 
regulators sent comments describing how individual State rate review 
laws affect the level of aggregation used in performing rate reviews.
    In considering the broad range of perspectives represented by the 
comments on aggregation, the proposed regulation requires the 
consideration of rate increases at the ``product'' level when 
determining whether the increase is subject to review. Product would be 
defined under this proposed regulation as a package of health insurance 
coverage benefits with a discrete set of rating and pricing 
methodologies that a health insurance issuer offers in a State. Most 
States require issuers to submit each ``product'' as a separate form 
filing prior to marketing the ``product'' in the State. While each 
filed ``product'' may include variable options (such as different cost-
sharing or deductible requirements), this definition,

[[Page 81011]]

consistent with State law, does not consider each variable option as a 
separate ``product.'' Any rate increase for a product that meets or 
exceeds the applicable threshold is subject to review. However, if an 
issuer has rate increases that meet or exceed the applicable threshold 
for multiple products, the issuer may submit a single, combined 
preliminary justification for those products combined, provided (i) the 
experience of all combined products has been aggregated to calculate 
the rate increases, and (ii) the rate increase is the same across all 
combined products.
2. Determining Whether a Rate Increase Meets or Exceeds the Threshold
    A rate increase would meet or exceed the applicable threshold if 
the weighted average increase for all enrollees subject to the rate 
increase meets or exceeds the applicable threshold. In this case, the 
weighted average takes into account the number of enrollees affected by 
each particular rate increase and represents the given increase 
proportionately. Specifically, we assume that different subcategories 
of enrollees will experience varying rate increases. The weighted 
average is calculated as follows: For each subcategory of enrollees 
subject to the same rate increase, we multiply the number of enrollees 
by the respective rate increase. The products are then summed over all 
subcategories. The sum is then divided by the total number of enrollees 
to arrive at the weighted average rate increase.
    A rate increase meets or exceeds the threshold either by itself, or 
when considered cumulatively with any previous rate increases 
implemented with respect to the product during the preceding 12-month 
period. Therefore, a single rate increase which by itself falls below 
the applicable threshold must be aggregated with rate increases 
implemented during the 12 month period preceding its effective date in 
order to determine whether it is subject to review. If a rate increase 
meets or exceeds the threshold when combined with a previous increase 
or increases during the 12-month period preceding the date on which the 
rate increase would become effective, the rate increase is subject to 
review, and such review shall include a review of the aggregate rate 
increases during the applicable 12-month period.

E. Review of Rate Increases Subject To Review by a State or by HHS 
(Sec.  154.210)

    As noted above, under this proposed regulation, States would 
continue to have primary responsibility for the review of rate 
increases. HHS would only review rates when a State has not yet 
established a process, including adequate legal authority, to do so. 
While not every State is currently equipped to conduct an effective 
review of insurance rates, the significant majority of States have a 
review process for some or all of the individual or small group 
markets, and many are planning to expand their authority to review 
rates using the grants provided in the Affordable Care Act detailed 
below. We fully expect that the vast majority of States will be able to 
conduct effective reviews in the future, should they choose to.
    A Kaiser Family Foundation survey designed to explore what rate 
review authority States have and how they exercise it, identifies 
various reasons that explain why there is wide variation in the review 
of rate increases by States.\2\ Some States have no legislative 
authority to approve or disapprove rates, while others have the 
authority to approve rates prior to implementation, or disapprove rates 
before or after implementation. Among States with robust legislative 
authority, a thorough rate review is contingent on State resources, 
staffing, and statutory timelines. The effectiveness of a State rate 
review program depends on State law as well as insurance department 
resources and practices, and will be determined, for purposes of this 
regulation, based on the State's ability to meet the criteria set forth 
in Sec.  154.301.
---------------------------------------------------------------------------

    \2\ Kaiser Family Foundation, ``Rate Review: Spotlight on State 
Efforts to Make Health Insurance More Affordable,'' December 2010, 
available at https://www.kff.org/healthreform/upload/8122.pdf.
---------------------------------------------------------------------------

    Section 2794(c) of the PHS Act established a program to award 
``premium review grants.'' Section 2794(c) makes available a total of 
$250 million through 2014 for the provision of grants to States to 
support their efforts to enhance review of premium increases. These 
grants are available to States with the goal of improving existing rate 
review programs, developing rate review programs in States where none 
exist, and improving the transparency of the rate review process for 
the public. On August 16, 2010 HHS announced the first cycle of grant 
awards totaling the amount of $46 million to build upon States' current 
processes for reviewing, and to the extent permitted by State law, 
approving health insurance premium increases. Forty-five States and the 
District of Columbia applied for grants, and each was awarded $1 
million in grant funds.
    In applying for the first phase of these grants in 2010, some 
States indicated a need for additional resources to make the State's 
rate review program more effective. Many States indicated they lacked 
funding to hire actuaries and to secure other resources essential to a 
meaningful rate review program. Therefore, the rate review process 
under this proposed regulation, in conjunction with the rate review 
grant program, would enhance the quality and quantity of review of rate 
increases that States are able to conduct, building on their existing 
efforts and processes.
    By requiring the Secretary to develop a rate review process in 
conjunction with the States, Congress also recognized that many States 
have significant experience reviewing rate increases and understand the 
local market forces driving health insurance rate increases. Therefore, 
HHS is proposing a rate review process that leverages State experience 
and expertise.
    Section 154.210 of the proposed regulation sets forth the factors 
that would determine whether HHS would review rate increases that are 
subject to review or whether HHS would adopt the determination made by 
a State regarding whether a rate increase is an unreasonable rate 
increase. To the extent that a State has an effective rate review 
program in a given market, as evaluated by HHS using the criteria set 
forth more fully below, HHS would adopt that State's determinations 
regarding rate increases subject to the State's review in a given 
market. Accordingly, upon receipt of the State's final determination 
and explanation for its determination, HHS would adopt the 
determination of a State that has an effective rate review program 
regarding whether a rate increase is unreasonable under applicable 
State law. If a State does not have an effective rate review program in 
place for the individual or small group markets within the State, only 
then would HHS review rate increases and make its own determinations of 
whether the rate increases are unreasonable.

F. Effective Rate Review Program (Sec.  154.301)

1. General Criteria for an Effective Rate Review Program
    This regulation sets out specific criteria, set forth in Sec.  
154.301(a), for evaluating whether a State has an effective rate review 
program in the individual and small group markets. Specifically 
defining these criteria provides transparency to the rate review 
process as these criteria are readily available to the States, health 
insurance issuers, and consumers. These criteria

[[Page 81012]]

were developed solely for the purpose of establishing the standards 
that HHS would use to evaluate, in consultation with the States, 
whether a State's rate review process is effective, or whether HHS 
would conduct rate reviews and make a determination as to whether a 
rate increase is unreasonable. Since a State may be in the process of 
improving its rate review program, and may be using grant funds and 
other resources for this purpose, HHS would make its determination 
based on the State's existing rate review program, including any recent 
changes made that would satisfy the criteria for an effective rate 
review program set forth in Sec.  154.301(a).
    Under proposed Sec.  154.301(a)(1), we set forth four criteria for 
an effective rate review program. These criteria are drawn from common 
practices that States use today for effective reviews. Underlying these 
proposed criteria is the principle that the purpose of an effective 
rate review program is to affirmatively determine, based on substantial 
evidence on the record as a whole, whether a rate increase is an 
unreasonable rate increase. The proposed regulation specifies that in 
order for a State's rate review program to be considered effective, the 
State needs to have the legal authority to obtain data and 
documentation that is sufficient to conduct an effective examination. 
The State would also be required to effectively review data and 
documentation submitted in support of rate increases. An effective rate 
review program would have to include an examination of both (i) the 
reasonableness of the assumptions used by the health insurance issuer 
in developing the rate proposal and the validity of historical data 
underlying such assumptions; and (ii) the issuer's data related to past 
projections and actuarial experience. As is the case for those States 
conducting effective review today, this examination of assumptions and 
past projections would be required to include analyses of at least the 
following twelve areas that typically impact rates:
     Medical trend changes by major service categories;
     Utilization changes by major service categories;
     Cost-sharing changes by major service categories;
     Benefit changes;
     Changes in enrollee risk profile;
     Impact of over- or under-estimate of medical trend in 
previous years on the current rate;
     Reserve needs;
     Administrative costs related to programs that improve 
health care quality;
     Other administrative costs;
     Applicable taxes, licensing or regulatory fees;
     Medical loss ratio; and
     The health insurance issuer's risk-based capital status 
relative to national standards.
    Finally, the State's determination of whether a rate increase is 
unreasonable would be made under a stand