Regulators Clear Covered California Rates, Hold Off On Narrow Networks

California regulators won’t challenge the next round of health insurance rate increases in the state exchange, but insurers’ narrow networks of doctors and hospitals are drawing tougher scrutiny.

The state’s two insurance regulators didn’t find proposed premiums for 2015 individual coverage to be unreasonable among the 10 health plans in the Covered California exchange. These rates also apply to individual coverage outside the state’s Obamacare marketplace.

Those decisions by the California Department of Managed Health Care and the state insurance department clear these rates to be used when open enrollment starts Nov. 15. Rates statewide are climbing 4.2%, on average, in the exchange for 2015.

“After careful and in-depth analysis, the DMHC found that the health plans’ proposed premium rates are actuarially sound,” said Shelley Rouillard, director of the Department of Managed Health Care.

The insurance department said it came to a similar conclusion on rates sought by Health Net Inc., the only company it was reviewing in this case.

But health insurers aren’t off the hook entirely.

Officials added that they are taking more time to examine insurance company lists of doctors and hospitals submitted for next year to ensure patients have adequate access to care.

In response to consumer complaints, the managed-health-care agency has been investigating whether Anthem Blue Cross and Blue Shield of California violated state law by misleading customers about their networks and making it too difficult to get treated.

The Times reported this week that Health Net is discarding its PPO exchange plan and replacing it with a more restrictive policy with 54% fewer doctors statewide. Health Net said it’s now adding more providers and supplying that information to regulators.

Consumers can search for doctors taking Obamacare coverage in The Times’ new statewide database for 2015 coverage.

This rate-review process could look far different if voters approve Proposition 45 next month.

The hotly contested initiative would give the state’s elected insurance commissioner the power to reject health insurance rate increases deemed excessive or unreasonable for individual and small-business policies.

State regulators can make that determination now but have no authority to block a rate hike.

Health insurers have contributed more than $37 million to defeat Proposition 45.

In reports filed with regulators, Consumers Union said Anthem, Blue Shield and Health Net all failed to supply enough information to justify their rate increases and the group questioned their assumptions about rising medical costs and the health of new enrollees.

Consumers Union, the publisher of Consumer Reports, was hired by the managed-healthcare agency to conduct an outside review of rate filings as part of a federal grant program.

In particular, the group challenged the 6% average rate increase Blue Shield sought for nearly 1.7 million individual policyholders in and outside the exchange.

Consumers Union asked why Blue Shield isn’t using some of its record-high $4.4 billion in reserve to hold down rates. Blue Shield’s surplus has doubled since 2006, state records show.

The nonprofit San Francisco insurer said its reserves have nothing to do with rate increases and that money has been put aside for the future benefit of its policyholders.

Betsy Imholz, special projects director at Consumers Union, said she would have liked to have seen lower rates for cash-strapped California families.

“The rates from Covered California came in pretty good,” she said, “but we were hoping they would be shaved a little.”

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