211 CMR 66.07 - Restrictions Relating to Premium Rates

Current through Register 1466, April 1, 2022

Premiums charged to Eligible Small Groups and Eligible Individuals, excluding Eligible Small Groups within a Group Purchasing Cooperative, shall be based on the collective experience of the covered small groups and individuals enrolled outside Group Purchasing Cooperatives. Premiums charged to Eligible Small Groups within a Group Purchasing Cooperative will be based on premiums available outside of all cooperatives, adjusted by that Group Purchasing Cooperative's specific Group Purchasing Cooperative Rating Adjustment Factor, if applicable. Premiums charged to every Eligible Small Business or Eligible Individual for a Health Benefit Plan issued or renewed on or after July 1, 2007, whether through a trust or association or through an Intermediary or Group Purchasing Cooperative, or through the Connector, or directly, also must satisfy the following requirements:

(1) Premium Calculations for Base Premium Rates.
(a) In calculating the premium to be charged to each Eligible Small Group or Eligible Individual, a Carrier shall develop a Base Premium Rate for each Rate Basis Type and may develop and use one or more of the Rate Adjustment Factors, provided that the Rating Adjustment Factors are required of all products offered to Eligible Small Groups and Eligible Individuals.
(b) In calculating the premium to be charged to each Eligible Small Group or Eligible Individual, a Carrier shall develop a Base Premium Rate for each Rate Basis Type and may develop and use only the Rating Adjustment Factors set forth in 211 CMR 66.07(1):
1. Age Rating Adjustment Factor. If a Carrier applies an age Rating Adjustment Factor to Eligible Individuals or Eligible Small Groups, the Carrier must apply the age rating adjustment factor in accordance with both the ACA and any guidance provided by the Commissioner.
2. Area Rating Adjustment Factors.
a. The area Rating Adjustment Factor for each distinct region in 211 CMR 66.07(2)(b)2., must range from not less than 0.8 to not more than 1.2.
b. The permissible regions are based on the following zip code groupings which refer to the first three digits of the zip code for each Eligible Small Business or Eligible Individual:
i. 010 through 013;
ii. 014 through 016;
iii. 017 and 020;
iv. 018 through 019;
v. 021 through 022 and 024;
vi. 023 and 027; and
vii. 025 through 026.

except that a Carrier may combine the zip code groupings outlined in 211 CMR 66.07(2)(b)2.b.iii. and iv. into one region or combine the zip code groupings outlined in 211 CMR 66.07(2)(b)2.b.iii. through v. into one region for all of its Health Benefit Plans subject to 211 CMR 66.00, or use regions based on groupings of counties that roughly approximate the zip code groupings.

c. If a Carrier chooses to establish an area Rating Adjustment Factor, it must apply the Rating Adjustment Factor to every Eligible Small Business and Eligible Individual within each area. The area Rating Adjustment Factor for an Eligible Small Group will be based on the location of the Eligible Small Group and the area Rating Adjustment Factor for an Eligible Individual will be based on the primary residence of the Eligible Individual.
3. Tobacco Use Rating Adjustment Factor.
a. The tobacco usage Rating Adjustment Factor, which may only be applied when expressly permitted by the Commissioner, will consistently apply to all Eligible Individuals and Eligible Small Groups.
b. Eligible Individuals and Eligible Small Groups must certify, in a method approved by the Commissioner, that Eligible Individuals and/or their Eligible Dependents or Eligible Small Group employees and/or their Eligible Dependents have not used tobacco products during the previous 12 months.
4. Benefit Level Rating Adjustment Factor.
a. The Benefit Level Rating Adjustment Factor for all Eligible Individuals and all Eligible Small Businesses must represent the ratio of the actuarial value of the Benefit Level, including the health care delivery network, of one Health Benefit Plan as compared to the actuarial value of the Benefit Level of another Health Benefit Plan, measured on the basis of a census that is representative of Massachusetts Eligible Individuals and Eligible Small Businesses for that Carrier.
b. If a Carrier chooses to establish a Benefit Level Rating Adjustment Factor, it must apply and interpret the Rating Adjustment Factor with respect to every Eligible Individual and Eligible Small Business.
(2) Transitional Rating Adjustment Factors Permitted. The Rating Adjustment Factors set forth in 211 CMR 66.07(2) are permissible during the Transition Period, so long as such Rating Adjustment Factors were documented to be in use by the Carrier prior to July 1, 2013 and are not changed thereafter.
1. Industry Rating Adjustment Factor.
a. If used for Eligible Individuals, the industry Rating Adjustment Factor applicable to an Eligible Individual must be based on the industry of the Eligible Individual's primary employer and must be the same Rating Adjustment Factor applied to Eligible Small Groups in the same industry.
b. A Carrier may not apply an industry Rating Adjustment Factor to an Eligible Individual who is not employed.
c. If a Carrier establishes an industry Rating Adjustment Factor, it must be applied to every Eligible Small Group in an industry.
d. If a Carrier uses an industry rating adjustment factor for Eligible Individuals, it must be applied to all Eligible Individuals based on the industry of an individual's identified primary employer.
e. No Carrier may employ an industry Rating Adjustment Factor for any new or renewing Health Benefit Plan after January 1, 2019, or after the expiration of the Transition Period, whichever is later.
2. Participation-rate Rating Adjustment Factor.
a. A Carrier may establish participation-rate Rating Adjustment Factors for any Health Benefit Plan or plans for any ranges of Participation Rates below the following minimum Participation Requirements:
i. For groups of five or fewer: not to exceed 100%.
ii. For groups of six or more: not to exceed 75%.
b. The participation-rate Rating Adjustment Factors must be based upon actuarially sound analysis of the differences in the experience of Eligible Small Businesses with different Participation Rates.
c. If a Carrier chooses to establish participation-rate Rating Adjustment Factors, it must apply the Rating Adjustment Factors to every Eligible Small Business within the ranges defined by the Carrier.
d. If an eligible small employer does not meet a Carrier's minimum participation or contribution requirements, the Carrier may separately rate each employee as an Eligible Individual.
e. No Carrier may employ a Participation-rate Rating Adjustment Factor for any new or renewing Health Benefit Plan after January 1, 2019, or after the expiration of the Transition Period, whichever is later.
3. Group Size Rating Adjustment Factor.
a. If a Carrier chooses to establish group size Rating Adjustment Factors, every Eligible Individual and Eligible Small Group shall be subject to the applicable group size Rating Adjustment Factor.
b. The group size Rating Adjustment Factor applies to both Eligible Individuals and Eligible Small Groups, the value of which shall range from 0.95 to 1.10 and for Eligible Small Groups must be based on the number of Eligible Employees who are enrolled in an Eligible Small Business.
c. If an Eligible Small Business does not meet a Carrier's participation or contribution requirements, the Carrier may apply the group size Rating Adjustment Factor that applies to Eligible Individuals to each employee who enrolls through the Eligible Small Business.
d. No Carrier may employ a Group Size Rating Adjustment Factor for any new or renewing Health Benefit Plan after January 1, 2019, or after the expiration of the Transition Period, whichever is later.
4. Intermediary Discount Rating Adjustment Factor. If a Carrier provides coverage to Eligible Small Businesses and Eligible Individuals through an Intermediary, the Carrier shall apply a discount Rating Adjustment Factor to the total premium for each Eligible Small Business and Eligible Individual obtaining coverage through the Intermediary. The discount Rating Adjustment Factor must be calculated to account only for the savings to the Carrier due to the administrative and marketing activities of the Intermediary which are related to the purchase of Health Benefit Plans for its Members from that Carrier. The discount Rating Adjustment Factor may not be calculated based on the claims experience, duration of coverage, health status or case characteristics of the Eligible Small Businesses enrolled in the Carrier's Health Benefit Plan through the Intermediary. The discount Rating Adjustment Factor may be negotiated between the Carrier and each individual Intermediary according to the range of services offered by each Intermediary. No Carrier may employ an Intermediary Discount Rating Adjustment Factor for any new or renewing Health Benefit Plan after January 1, 2019, or after the expiration of the Transition Period, whichever is later.
5. Group Purchasing Cooperative Rating Adjustment Factor. A Carrier may apply a Group Purchasing Cooperative Rating Adjustment Factor that is specific to one Group Purchasing Cooperative and based on the actuarially projected different experience of that Cooperative's potential covered Members compared to the experience of those Eligible Individuals and eligible employers who have coverage outside all of the Group Purchasing Cooperatives. Any such Group Purchasing Cooperative Rating Adjustment Factor must be applied uniformly to the rates of all persons who obtain coverage through that Group Purchasing Cooperative. Notwithstanding the requirements of 211 CMR 66.08(2)(a), a Carrier shall submit all Group Purchasing Cooperative Rating Adjustment Factors to the Division for review upon request. No Carrier may employ a Group Purchasing Cooperative Rating Adjustment Factor for any new or renewing Health Benefit Plan after January 1, 2019, or after the expiration of the Transition Period approved by the Centers for Medicare & Medicaid Services, whichever is later.
(3) Premium Rate Calculation Not Experience Based. No Carrier may charge a premium rate to an Eligible Individual or Eligible Small Business that is based upon the Eligible Individual's or Eligible Small Business' health status, duration of coverage, or actual or expected claims experience.
(4) Additional Information Regarding Premium Rate Calculation. Until January 1, 2019, or the end of the Transition Period, whichever is later, the premium charged by a Carrier to each Eligible Individual or Eligible Small Business on the date the Eligible Individual's or Eligible Small Business' Health Benefit Plan is issued or renewed shall be established such that the premium rates charged for each rate basis type at the beginning of the rating period adjusted to a January 1st basis, equals:

the group Base Premium Rate for the single Rate Basis Type, multiplied by the Rate Basis Type adjustment factor;

multiplied by the Benefit Level rate adjustment;

multiplied by the area rate adjustment;

multiplied by the group size rate adjustment;

multiplied by the Group Purchasing Cooperative adjustment factor;

as may be applicable pursuant to 211 CMR 66.07.

Notes

211 CMR 66.07
Amended by Mass Register Issue 1349, eff. 10/6/2017.

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