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CA Department of Insurance

Commissioner Jones Announces Department of Insurance Awarded Federal Grant Funds to Increase Medical Pricing Transparency and Support Rate Review

News: 2013 Press Release

For Release: September 23, 2013
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Commissioner Jones Announces Department of Insurance Awarded Federal Grant Funds to Increase Medical Pricing Transparency and Support Rate Review
California loses out on additional funding because California lacks health insurance rate regulation authority

SACRAMENTO, Calif. - Insurance Commissioner Dave Jones announced today that the California Department of Insurance (CDI) will receive federal grant funds to enhance transparency in health care pricing as part of an initiative under the Affordable Care Act. The federal grant funds are to be used over a two-year period to establish a "data center" which will collect, analyze, and disseminate data to the public regarding health care costs and quality in order to increase transparency of medical pricing in California. A portion of the grant funds will also be used in the second year of the grant cycle to continue implementing the provision of the Affordable Care Act that requires health insurance rate review. However,California again is not eligible for additional grant funding for states with "prior approval" authority to reject excessive health insurance rates before they go into effect.

The U.S. Department of Health and Human Services (HHS) announced that 21 states will receive grants to review unreasonable premium increases and enhance the transparency of health care costs.

CDI has been awarded approximately $5.2million as part of the Cycle III Rate Review Grant awards. But states with prior approval or rate regulation authority over rates are eligible for an additional $400,000 in supplemental "performance" awards. For a second time, California was not awarded the additional funds because it lacks prior approval authority. In 2011, California received a federal Cycle II Rate Review Grant award but did not qualify for a $600,000 performance award because California lacks health insurance rate regulation authority.

"Consumers today are unable to compare prices for doctors, hospitals, and other medical providers because price information is simply not available," said Commissioner Jones. "Even with Obamacare, consumers still face significant out of pocket medical costs including deductibles and co-payments. Providing consumers greater access to medical provider pricing before they seek care could be a real game changer."

The Department of Insurance intends to use the grant funding to:

  • Contract with an academic or other non-profit institution to create a free, publicly accessible online database that: 1) collects and aggregates medical claims data regarding the costs and quality of health care in California, and organizes the data by episode of care or medical procedure; 2) allows consumers to compare health care costs and quality for a given service provided by different health care professionals/facilities across the state; and 
  • Continue rate review activities: CDI uses actuarial staff to conduct thorough reviews of health insurance rate filings, issue non-binding determinations about whether the proposed rate is unreasonable and post the health insurance rate filings and the determinations on its Web site. But unlike 35 other states, California has not enacted legislation to give the Insurance Commissioner the authority to reject outright excessive health insurance rates.

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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