Virginia Law

A. Every policy, rider, or endorsement form affecting benefits which is submitted for approval shall be accompanied by a rate filing unless such rider or endorsement form does not require a change in the rate. Any subsequent addition to or change in rates applicable to such policy, rider, or endorsement form shall also be filed.

B. Each rate submission shall include an actuarial memorandum describing the basis on which rates and rating factors were determined and shall describe and provide the calculation of the anticipated loss ratio. Except for individual and small employer group health insurance coverage, interest at a rate consistent with that assumed in the original determination of premiums shall be used in the calculation of this loss ratio. Each rate submission must also include a certification by a qualified actuary that to the best of the actuary's knowledge and judgment, the rate filing is in compliance with the applicable laws and regulations of this Commonwealth, and that the benefits are reasonable in relation to the premiums.

C. Insurers shall maintain records of earned premiums and incurred benefits for each calendar year for each policy form, including data for rider and endorsement forms which are used with the policy form, on the same basis, including all reserves, as required for the Accident and Health Policy Experience Exhibit. Separate data may be maintained for each rider or endorsement form to the extent appropriate. Experience under forms which provide substantially similar coverage may be combined. The data shall be for each calendar year of experience since the year the form was first issued.

D. In determining the credibility and appropriateness of experience data, due consideration must be given to all relevant factors, such as:

1. Statistical credibility of premiums and benefits, e.g., low exposure, low loss frequency.

2. Experienced and projected trends relative to the kind of coverage, for example, inflation in medical expenses, economic cycles affecting disability income experience.

3. The concentration of experience at early policy durations where select morbidity and preliminary term reserves are applicable and where loss ratios are expected to be substantially lower than at later policy durations.

4. The mix of business by risk classification.

E. Rates for individual or small employer group health insurance coverage are required to meet the following:

1. Premium rates with respect to a particular plan or coverage may only vary by:

a. Whether the plan or coverage covers an individual or family;

b. Rating area, as may be established by the commission;

c. Age, consistent with the default Uniform Age Rating Curve as specified in guidance by the federal Secretary of Health and Human Services in accordance with 45 CFR 147.102(a)(1)(iii); and

d. Tobacco use, except that the rate shall not vary by more than 1.5 to 1. Employees of a small employer may avoid this surcharge by participating in a wellness program that complies with § 2705(j) of the Public Health Service Act (42 USC § 300gg-4).

2. A premium rate shall not vary by any other factor not described in this subsection.

3. With respect to family coverage, the rating variations permitted in this subsection shall be applied based on the portion of the premium that is attributable to each family member covered under the plan. With respect to family members younger than 21 years of age, the premiums for no more than the three oldest covered children shall be taken into account in determining the total family premium.

4. The premium charged shall not be adjusted more frequently than annually, except that the premium rate may be changed to reflect changes to (i) the family composition of the member, (ii) the coverage requested by the member, or (iii) the geographic location of the member.

5. Premium rates for student health insurance coverage may be based on school-specific community rating and are exempt from subdivisions 1 through 4 of this subsection.

F. If the proposed area rate factors set forth in a rate filing for individual or small employer group health insurance coverage by an insurer for a rating area exceed by more than 15% the weighted average of the proposed area rate factors among all rating areas in which the insurer offers health benefit plans in that market, then:

1. The insurer's rate filing shall include in a publicly available and unredacted form:

a. A comparison of the area rate factor for individual and small employer group health benefit plans that utilize the same provider network and provider reimbursement levels of the health benefit plans that are subject to the filing;

b. A detailed disclosure of the area rate factor methodology, which shall include any third-party resources or representations from a person other than the signing actuary, on which the signing actuary relied, provided that disclosure of third-party resources shall address that the source data only reflects differences in unit cost and provider practice patterns; and

c. To the extent that the insurer is deriving any area rate factor from experience data, by rating area for the experience period used:

(1) The (i) total enrollment; (ii) total premiums; (iii) allowed claims; (iv) incurred claims excluding anticipated or, if available, actual risk adjustment payments or receipts; (v) incurred claims including anticipated or, if available, actual risk adjustment payments or receipts; and (vi) loss ratio for each of their rating areas in that market; and

(2) Aggregated incurred claims for any health system exceeding 30% of total incurred claims for that rating area in that market.

2. The commission shall hold a public hearing on the proposed premium rates prior to the approval of the rate filing.

3. The commission shall not approve the proposed rate filing if (i) a variance in area rate factors, indexed to the same rating region for both the individual and small group markets, of 15% or more exists between health benefit plans an insurer intends to offer in the individual market and health benefit plans intended to be offered in the small group market, when those plans utilize the same provider network and provider reimbursement levels and (ii) the methodologies used to calculate the area rate factors are different between the two markets.

G. Beginning for plan year 2020, an insurer with an approved rate filing that contains at least one area rate factor that exceeds by more than 25% the weighted average of the area rate factors among all rating areas in a market in which the insurer offers individual or small employer group health insurance coverage shall file with the commission for each calendar quarter during that plan year a report that provides, for each rating area within the market in which the insurer operates, the plan's (i) enrollment; (ii) total premiums; (iii) allowed claims; (iv) incurred claims excluding anticipated or, if available, actual risk adjustment payments or receipts; (v) incurred claims including anticipated or, if available, actual risk adjustment payments or receipts; (vi) loss ratio; and (vii) aggregate incurred claims, for each health system exceeding 25% of total incurred claims for that rating area. The insurer shall make each such quarterly report publicly available, without redaction, not later than 45 days after the end of the calendar quarter.

H. The commission may investigate and determine whether a rate is excessive, unfairly discriminatory, or unreasonable in relation to the benefits provided. In the event of disapproval or withdrawal of approval by the commission of a rate submission, an insurer may proceed using the process described in § 38.2-1926 of the Code of Virginia.