Regence BlueCross BlueShield Defeats Efforts to Notify Consumers about Rate Hikes
March 22, 2013 — Sen. Laurie Monnes Anderson, D-Gresham, helped Regence BlueCross BlueShield and other insurers defeat a requirement that they notify consumers of pending rate hikes above 7 percent — a measure pushed by Sen. Chip Shields, D-Portland, which easily passed the Senate in the 2011 session.
Instead, Monnes Anderson supported an amendment of Senate Bill 413 written by Regence that merely requires that insurers indirectly notify consumers once a year that public information exists about rate reviews.
Rate review information is posted publicly on a website run by the Department of Consumer and Business Services’ Insurance Division, which has prior approval of all rate increases.
The heavily amended SB 413 passed out of committee unanimously, setting up a floor vote next week. Shields still supported the measure, despite the nearly total rewrite from the original bill.
Originally, SB 413 would have given health insurers three days to notify customers after they filed a rate hike above 7 percent on plans with 1,000 customers or more. Currently, the Insurance Division has 30 days to review insurers’ justifications for the increase and either approve or ask that insurers reduce the hike.
“Politics is the art of the possible,” said Shields, who wanted to respect the work Monnes Anderson had done with insurers and OSPIRG to reach a resolution. Those talks failed to reach consensus, resulting in the Regence amendment coming forward in lieu of the original bill.
“I would have preferred insurance companies notify consumers directly,” Shields said.
The notice about the information available on the DCBS website could be buried in the fine print of a policy’s explanation of benefits, according to Jesse Ellis O’Brien, the health policy advocate for OSPIRG, a public interest group.
OSPIRG proposed its own compromise amendment to SB 413, requiring a detailed informational letter and a chance for customers who sign up or renew policies to also sign up through the insurer for updates from the rate review website — www.oregonhealthrates.org.
“Insurers would send out information about the rate review process and allow customers to sign up to receive notifications from DCBS that are already available but they don’t know are available,” O’Brien said.
But OSPIRG’s amendment was quashed by Monnes Anderson in favor of Regence’s version. She told The Lund Report that O’Brien’s suggested amendment would have imposed administrative costs on insurers and was opposed to the extra paperwork that such a notice letter would require.
“We do not want to incur new costs with the Affordable Care Act going into place, and we need to streamline the process… [Insurers] are doing massive changes to comply with Cover Oregon,” Monnes Anderson said, mentioning the insurance exchange where individuals and small groups will be able to buy health insurance next year in accordance with federal law.
She said this was the wrong time to enact new requirements on insurance companies above what they are already doing for the exchange. She was also more optimistic that SB 413 as passed would provide consumers with clearer notice about existing information regarding rate reviews on the Oregon health rates website.
O’Brien said the website provided terrific information about rate hikes pending or approved by the Insurance Division, but he doubted more than a few hundred consumers signed up to receive e-notification updates. DCBS spokeswoman Cheryl Martines said she did not have exact figures immediately available, but at least 4,000 individuals had signed up for the updates.
O'Brien said many of those could be insurance employees keeping an eye on competitors, as well as independent brokers.
Small businesswoman Michelle Curry of Beaverton testified at the public hearing in early February that she would not offer insurance to employees because she was worried about sudden rate hikes with so little notice.
“I’m a little bit apprehensive to begin offering a benefit when we have no visibility on the potential increases and no way to really impact them,” Curry told the committee.
In 2008, Regence BlueCross BlueShield hiked individual plans by 26 percent in a single year and annual rate hikes have continued to be two to three times the rate of inflation.
Last year, insurers submitted rate increases from 0 to 15.7 percent in the individual insurance market. All of them except LifeWise Health Plan of Oregon had increases above 7 percent on at least some of their individual plans.
Providence Health Plan asked for the highest increase, while Regence asked for a 9.6 percent hike and was allowed an 8.9 percent hike. All but two plans had their rates scaled back by the Insurance Division, some as much as one-half of the proposed increase.
Insurance Commissioner Lou Savage told the committee that unless consumers already knew to sign up for the updates through the Oregon health rates website, the first time most policyholders would ever see notice of rate hikes would be when they receive their renewal forms.
In 2011, the more robust bill requiring rate hike notices to consumers passed the Senate 25-5, with the support of Monnes Anderson, but it died in the House Health Committee, which was evenly split between Democrats and Republicans.
This time around, Regence lobbyist John A. Powell was able to prevent a serious consideration of that legislation from ever moving forward by arguing that sending rate review notices to customers would be unduly burdensome and take weeks to complete, not three days, as the bill required.
“That’s not something that most insurance companies, at least ours could meet. Three days is not practical,” Powell said.
Powell said there were many precautions an insurer must take so not to violate federal privacy laws and ensure that the notice went to the right customers.
But Rick Skayhan, a Portland insurance broker, said Powell’s claim was dubious. Earlier, when he worked as a marketing officer for Health Net Health Plan, Skayhan said he routinely had to send out information to a discrete number of customers with very specific health plans and was able to do so in 24 hours.
Such information is electronically data based and available through insurance codes that would provide adequate privacy protection, said Skayhan, adding that insurers have the ability to run a report limited to only the affected plans with a few keystrokes and send them to people either by email or by using their home address.
“This is not beyond their capacity,” he said.