Green Mountain Care Board explains rate-review process for fully insured health plans

Michael Barber, general counsel to the Green Mountain Care Board, outlined the board’s rate-review program and the steps used to evaluate premiums for fully insured health insurance plans.

The rate-review process matters because it scrutinizes insurer requests that directly affect premiums paid by Vermonters in the individual and small-group markets and informs whether proposed increases are modified before plans reach consumers.

Barber said the board reviews “fully insured major medical health insurance plans,” commonly called comprehensive coverage, across three markets: individual, small-group and large-group. He noted the board does not review self-insured employer plans, Medicare (including Medicare Advantage and Medicare supplemental plans), Medicaid, workers’ compensation plans or limited-benefit and other specialty plans.

Barber provided recent review statistics: in the prior year the board reviewed 10 rate filings covering about $810,000,000 in premiums for roughly 82,000 people, more than 70,000 of whom were in the individual and small-group markets. Insurers sought increases totaling about $150,000,000; the board’s review reduced those proposed increases by an estimated $11,400,000. Barber also referenced solvency concerns raised by Chair Foster about Blue Cross Blue Shield at the time of those filings.

Barber described the operational steps of a review: an insurer files proposed rates supported by actuarial analysis; the board contracts with an external actuarial firm to review filings; the healthcare advocate may suggest questions; the board and its actuaries ask follow-up questions; by the 60th day the actuaries submit a report with analysis and recommendations; the Vermont Department of Financial Regulation provides an opinion on insurer solvency; and the board holds evidentiary hearings (typically for individual and small-group plans) followed by a public comment meeting for those markets.

“The board issues a written opinion, that has to be done within 90 days from the date of the filing,” Barber said. He added that parties can appeal board decisions to the Vermont Supreme Court.

Barber described what goes into a premium: he said roughly 85 to 92 percent of premium dollars are driven by projected claims costs. The remaining non-claims components include administrative expenses, taxes and fees, and a contribution to reserves or margin. On the claims side, he said premiums reflect utilization and unit costs for medical and pharmacy care.

A committee member asked how reserves factor into the medical loss ratio (MLR). Barber summarized that the MLR measures “how much of every dollar you take in [is] going to pay for claims” and acknowledged the MLR requirements are federal and state rules: 80 percent for individual and small-group qualified health plans and 85 percent for large-group plans.

Committee members also asked whether malpractice and litigation costs feed into rates; Barber said he did not have a detailed answer on that point but observed malpractice coverage can influence provider prices and thus could indirectly affect premiums.

Barber said the board does not maintain in-house actuaries for all parts of the review and relies on contracted actuarial consultants to prepare the formal analyses used in deliberations. He also noted that roughly half of Vermonters have private health insurance and that a large majority of those are covered by self-insured employer plans, which are generally outside the board’s rate-review jurisdiction.

The presentation closed with a brief overview of other agencies and steps that interact with plan approvals: the Department of Vermont Health Access (DVHA) manages plan design and certification for the exchange, the Department of Financial Regulation handles form review and solvency oversight, and exchange vendors load certified plans and test subsidy calculations ahead of open enrollment, which Barber said begins in early November.

The board answered committee questions but did not propose changes to the rate-review process during this session.