Health Care Reform has been at the forefront of current events for a number of years, especially for Massachusetts residents who, since July 2007, are mandated by law to have healthcare coverage. The costs associated with health care insurance are a significant financial burden for employers and employees alike. Therefore, with all the buzz about “reform” many people were downright shocked by the 2010 premium rates, which increased anywhere between 8 to 32 percent for the small group market.

On April 1, the state Division of Insurance rejected 235 of the 274 proposed increases by insurers for plans that cover individuals and small businesses. The Suffolk Superior Court agreed with the state’s course of action by stating that the insurance companies have to exhaust all administrative appeals within the Insurance Division prior to the courtroom. Thus, meaning that the April, May and June fees were formally rejected and the insurance companies will not be permitted to follow their 2010 rate schedules until further review by the state.

The Division of Insurance issued letters to the carriers outlining the reasons for the disapproval:

* The disapproved rate filings failed to illustrate how the carriers pay similarly situated providers differing rates of reimbursement based solely on quality of care, mix of patients, intensity of services, and geographic location at which care is provided.

* The disapproved rate filings failed to demonstrate that carriers have renegotiated provider reimbursement rates;

* The disapproved rate filings were significantly above the medical consumer price index and the filings could not adequately explain the wide difference.

For the time being, 2009 premium base rates will remain in effect. However, the base rates have been adjusted in relation to plan benefits, member ages and geographic location. Subscribers who were billed based on the disapproved 2010 fee schedule will be sent a letter regarding the amended rate. Overpayments will be credited on a future invoice, and a corrected invoice will be forwarded approximately 60 days after the effective date of coverage.

The 2009 rates are being used on an interim basis and are not guaranteed for the plan year. The Division of Insurance process, and any other additional proceedings, will determine what happens in the latter months. The rates as they stand are subject to change either if the Insurance Division approves new rates or if the rates are modified pending the ongoing administrative appeals process.

It is important that businesses pay current and future invoice amounts as stated and on time. Insurers will enforce the collection process. For small group employers and individuals in Massachusetts, premium payments are due on or before the first of the covered month with a 10-day grace period.

P. Derek Ten Broeck Jr., LUTCF of the Ten Broeck Insurance Group of Pepperell has been in the insurance business for 22 years. His firm specializes in life and health insurance products for small businesses and individuals. Derek lives in Pepperell with his wife Erin and three kids, Tyler, Molly and Christopher. Contact Derek at 978-433-6300 or for any feedback or questions.