Grants to States to Support Health Insurance Rate Review and Increase Transparency in Health Care Pricing

This page contains frequently asked questions about the funding opportunity announcement: Grants to States to Support Health Insurance Rate Review and Increase Transparency in Health Care Pricing, Cycle III of the Rate Review Grant Program.

What are the goals of this funding opportunity?

The Centers for Medicare & Medicaid Services (CMS) has released the third cycle of Rate Review Grant funding. This Funding Opportunity Announcement (FOA) is entitled “Grants to States to Support Health Insurance Rate Review and Increase Transparency in Health Care Pricing”, Cycle III of the Rate Review Grant Program.

The Rate Review Grant program helps states to establish and enhance effective Rate Review programs as well as to enhance or establish data centers that increase health pricing transparency. The Cycle III Funding Opportunity Announcement (FOA) builds upon the successes that states have experienced in expanding their rate review programs, and in enhancing data centers’ efforts to increase health pricing transparency.

What is a data center, and how do they increase pricing transparency?

Data centers empower consumers and employers by increasing transparency in the health care system. Specifically, these centers collect, analyze, and publish health pricing and medical claims reimbursement data. Their publications help the public to better understand the comparative price of procedures in a given region or for a specific issuer or service setting. A good example is New Hampshire’s HealthCost website (http://www.nhhealthcost.org/). Businesses and consumers can use this data to drive decision-making and reward cost-effective provision of care. In addition, health care providers can use health pricing data to better understand what drives health care quality and costs.

Who is eligible to apply for this funding opportunity?

The FOA is open to all 50 states, the District of Columbia and the five U.S. territories to develop or enhance their respective rate review programs and/or establish data centers. Only one application per state is permitted, except in a state in which there are two regulating entities, each with a primary responsibility over the regulation of a portion of the private health insurance market. Data centers must be academic institutions or other non-profit organizations, and states may partner with existing data centers or establish new ones. Data centers can be located in the applicant state or in another state.

The FOA contains additional detailed criteria related to eligibility. For a detailed description of eligibility, please see Section III, entitled Eligibility Information, in the grant solicitation. The grant solicitation can be found at www.grants.gov, Catalog of Federal Domestic Assistance (CFDA) 93.511.

When is the application due?

The completed application is due August 1, 2013. In addition, applicants are required to submit a letter of intent by July 12, 2013.

How can my agency apply for this funding opportunity?

You can find the grant solicitation at www.grants.gov, Catalog of Federal Domestic Assistance (CFDA) 93.511.

How much funding is available through this funding opportunity?

A total of approximately $87 million is available for the Cycle III grants.

How have grantees used previous Cycle I and II funding? How does rate review save money for consumers?

Grant recipients have used Cycle I and Cycle II Rate Review Grant funding in a number of ways, including seeking authority to review health insurance rate increases, expanding the scope of rate review, improving the rate review process, making information on health insurance rates publicly available through transparency initiatives, developing and upgrading technology, and by analyzing medical claims reimbursement data.

Preliminary results indicate that effective rate review is helping states to slow down health insurance premium growth. As part of the Rate Review Grant Program, HHS collects data from states about all rate increases. Based on 2011 premium data, rate review helped to lower premiums in the individual and small group markets by an estimated $1 billion compared to the amount initially requested.¹ A recent research brief by the Assistant Secretary of Planning and Evaluation provided further evidence that rate review is restraining premium increases. The research brief found that, “the proportion of rate filings in which the requested increase was 10 percent or more declined from 75 percent in 2010 to 34 percent in 2012, consistent with the increased scrutiny that such requests now receive. Available data for 2013 suggest that this pattern of slower premium growth has been maintained so far in 2013, with only 14 percent of requested rates at 10 percent or more. In addition, the average premium increase in 2012 was 30 percent below that in 2010.”²

What is new in this funding announcement regarding data centers? How does this funding opportunity relate to the hospital price transparency data recently published by the Department of Health and Human Services?

This funding opportunity provides greater flexibility to and funding for data center activities. By increasing support for data centers, this funding opportunity will increase transparency throughout the medical system, including hospitals and other service settings.

In addition to increased funding, data centers will benefit from the hospital charge data recently released by the Department of Health and Human Services. The new hospital charge data will supplement existing pricing data and help data centers to provide regional and national comparisons.

¹ "2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for Consumers," U.S. Department of Health and Human Services, September 11, 2012, available at: http://www.healthcare.gov/law/resources/reports/rate-review09112012a.html (2012 Annual Rate Review Report).
² “Health Insurance Premium Increases in the Individual Market Since the Passage of the Affordable Care Act,” U.S. Department of Health and Human Services, February 22, 2013, available at: http://aspe.hhs.gov/health/reports/2013/rateIncreaseIndvMkt/rb.cfm.