Updated March 27 at 6:35pm

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HEALTH INSURANCE

Koller cuts requested rate increases for commercial health insurers

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PROVIDENCE – R.I. Health Insurance Commissioner Christopher F. Koller announced today his decision to “significantly lower “ the average requested 2013 health insurance premiums for Rhode Island’s three commercial insurers – Blue Cross & Blue Shield of Rhode Island, UnitedHealthcare of New England and Tufts Health Plan.

As a result, employers in Rhode Island will see expected average premium increases limited to a range of 1.65 percent to 5.53 percent, according to Koller.

The decision reflects Koller’s efforts to cap increases in medical expenses at 4 percent as well as to respond to concerns voiced by businesses on how increases in health insurance costs were injuring their ability to compete.

For small employers, Blue Cross’s requested average rate increase of 4.15 percent was cut to 1.65 percent; Tufts requested average rate increased was trimmed from 6 percent to 5.30 percent; and UnitedHealthcare requested average rate increase of 6.2 percent was reduced to 2.54 percent.

Similarly, for large employers, Blue Cross’s requested average rate increase was cut from 5.88 percent to 3.98 percent; Tufts requested average rate increased was trimmed from 6 percent to 4.50 percent; and UnitedHealthcare’s requested average rate increase was reduced from of 7.80 percent to 5.53 percent.

Unlike previous decisions, which were announced by news release, this year’s decision was done as a public event at EpiVax, Inc., a vaccine research company located in Providence’s Knowledge District. It featured Koller, Gov. Lincoln D. Chafee and Lt. Gov. Elizabeth H. Roberts. The decision to hold an event was made to reflect “the team approach” as well as his office’s efforts to engage with the business community, according to Koller.

“The public comment my office has received made it clear that Rhode Island employers need relief now from the unsustainable rise in health insurance costs,” Koller said.

All the health insurers have accepted the average rate reduction in health insurance premiums, and will not challenge them in court, according to Koller.

Koller acknowledged that the 2013 rate reductions may prove to be short-lived, given the increasing trends of higher utilization of medical services. “These are historically low rates of increase,” he said. “Yet we have every reason to believe that as medical utilization continues to increase, it will put pressure on the insurers and the hospitals and the delivery system.”

Blue Cross issued a statement saying that it disagreed with Koller’s rate decisions, but felt the best course of action was to accept the rates and plan to submit a new group rate factor filing in the near future.

“While Commissioner [Koller] has made a significant contribution to delivery system change in Rhode Island through efforts to advance primary care and the hospital contracting conditions, payment reform evolution is the path to delivery system transformation, not artificial rate controls that do not fully consider insurer solvency and fairness to providers,” said Peter Andruszkiewicz, Blue Cross president and CEO.

Koller told Providence Business News that a new study would be released this fall addressing some issues of transparency in medical costs. The study, done in partnership with the R.I. Executive Office of Health and Human Services, will examine the differences in “how hospitals are paid,” looking at Medicaid, Medicare and private insurance reimbursements.

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