Rate Justification for Maine Individual Plans

Harvard Pilgrim Health Care of New England, Inc.

Rate Change Effective January 1, 2018

Qualified Health Plan (QHP) issuers are required to post justifications for any QHP rate increases to their websites. Below, please find the justification for the rate increase effective January 1, 2018 for the Harvard Pilgrim New Hampshire Individual QHP plans.

Drivers of the Rate Increase

There are several key drivers of the 2018 rate increase:

  • The federal government will not be funding the cost-sharing reduction subsidies provided under the ACA for Qualified Health Plans purchased on a Federally Facilitated Marketplace (i.e. The Exchange). Therefore, rates must be increased to compensate for the absence of funding for these subsidized plans.
  • Another driver of the rate increase is medical trend, which is comprised of inpatient, outpatient, and physician services, as well as pharmacy costs. The expected medical cost trend increases include both increases in the cost of the services provided by hospitals and physician groups, and increases in the utilization of these services by our members.
  • The health insurance provider (HIP) fee will be reinstated for 2018, and the cost of this fee needs to be added to the rates. The fee was enacted through the ACA and is determined as a percent of premium. The Consolidated Appropriations Act of 2016 waived the health issuer provider fee for 2017. 
  • Finally, the size of the Individual market is expected to continue to decline as the uncertainty around provisions of the ACA – and in particular the enforcement of individual mandate – impact purchasing decisions. It is anticipated that continued non-enforcement of the individual mandate will result in younger, healthier members being the first to leave the market, which will result in a more expensive risk pool in 2018.

Harvard Pilgrim carefully monitors administrative expenses year-to-year. Administrative costs for Harvard Pilgrim have not increased significantly, and therefore do not factor into the overall rate increase for 2018. Under the Affordable Care Act, at least 80% of premium must be used for medical expenses (otherwise, a rebate is paid to subscribers). After the 2018 rate increase, Harvard Pilgrim expects to comply with this requirement.

Harvard Pilgrim Strategy to Keep Premiums Affordable

Harvard Pilgrim is committed to improving value and quality across the health care system. Some of the ways we are working to meet our goals include:

  • Establishing collaborative arrangements with providers that control costs and enhance health outcomes
  • Negotiating pharmacy contracts aligning payments with outcomes
  • Managing rare diseases through our nurse care managers
  • Updating our payment policies to deter inappropriate payment for services on selected medical infusible drug claims
  • Maintaining focus on reducing fraud, waste and abuse

Continuing to find ways to lower health care costs while providing enhanced value to our customers through our products and services is a keystone to Harvard Pilgrim’s long-term strategy.