Code of Vermont Rules › Agency 21 - DEPARTMENT OF FINANCIAL REGULATION › Sub-Agency 040 - DIVISION OF HEALTH CARE ADMINISTRATION › Chapter 014 - COMMUNITY RATING AND APPROVAL OF COMMUNITY RATING FORMULAS › Section 21 040 014 - COMMUNITY RATING AND APPROVAL OF COMMUNITY RATING FORMULAS

Current through June,
				2024
ATTACHMENT 1 WORKSHEET
A. DEFINITIONS
"COMMUNITY RATING" means a rating process that produces
				  average premium rates for a defined community of insureds in the State of
				  Vermont for the given policy period. The averaging process includes various
				  geographic rating areas, if any, within Vermont, ages and genders of the
				  Vermont insureds, industrial classifications within Vermont, if any, Vermont
				  claims experience, size of group within the small group definition, and
				  duration of coverage. Different community rates are appropriate for the
				  different insurance models which may be represented by indemnity coverage,
				  indemnity coverage with managed care, preferred provider organizations and any
				  other health insurance model as approved by the Commissioner.
"DEMOGRAPHIC RATING" means a rating process that adjusts the
				  community rate for a specific small group, based on that small group's
				  deviation from the average age and gender in the community rate.
"EXPERIENCE RATING" means a rating process that adjusts the
				  community rate for a specific small group, based on the deviation of the
				  group's own claim experience from the average claim experience in the community
				  rate. The definition recognizes that an experience rating formula for small
				  groups may give only partial credit to the group's own experience In any
				  experlence rating plan.
"GEOGRAPHIC AREA RATING" means a rating process that adjusts
				  the community rate for a specific small group, based on the deviation of the
				  claims experience in the area in which the group is located from the average
				  claims experience in the community rate.
"INDUSTRY RATING" means a rating process that adjusts the
				  community rate for a specific small group, based upon the deviation of the
				  experience of its industrial classification from the average experience in the
				  community rate.
"PRE-EXISTING CONDITION" means a condition that exists during
				  the twelve-month period before the effective date of coverage.
"DURATIONAL RATING" means a rating process that adjusts the
				  community rate for a specific small group, based on the group's deviation from
				  the average claims experience assumed in the community rate due to the period
				  of time the policy has been in force.
"TIER RATING" means a rating process that assigns small
				  groups to one of a series of rating tiers, based upon claims experience of the
				  group, or based upon one or a combination of demographic, industry, and
				  geographic rating factors.
"CREDIBILITY" means a measure of the degree of statistical
				  significance that can be assigned to the claims experience of a small group
				  when it is used as a basis for projecting a future rate.
"HEALTH INSURANCE TREND FACTOR" means a projection factor
				  that is an estimate of the unit cost increases and utilization increases that
				  are expected to be incurred in a health benefits plan. The estimate of unit
				  cost increases and utilization increases may include consideration of erosion
				  of deductibles, medical technology, general inflation and cost shifting.
"SMALL GROUP PLAN" means a Small Group Plan as defined in
				  Title
				  8 V.S.A., Section
				  4080a.
"SMALL EMPLOYER" means a Small Employer as defined in Title
				  8 V.S.A., Section
				  4080a.
"REGISTERED SMALL GROUP CARRIER" means a Small Group carrier
				  as defined in Title
				  8 V.S.A., Section
				  4080a.
B. COMMUNITY RATING METHODOLOGY
1. This community rating regulation applies
				to registered small group carriers providing small group health plans to small
				groups. For purposes of this regulation, Multiple Employer Trusts, Multiple
				Employer Welfare Associations and other associations that are made up of a
				collection of small groups are included (Section B9 refers to certain
				conditions under which general associations may be excluded).
2. To be considered acceptable by the
				Commissioner, the community rates submitted by a registered small group carrier
				must be effective for at least a six-month policy period.
3. Premiums shall be submitted for "single",
				"two person" (two adults or one adult and one child) and "family" membership
				classifications. Other or different classifications may be filed and used,
				provided they are approved by the Commissioner.
4. Community rates shall be calculated in
				such a manner that appropriate and separate rates are available for each
				insurance model for each month in which small groups renew policies or new
				small group business is written by a carrier. Compliance with this regulation
				can be accomplished in many ways, some of which are listed here:
4.1 a set of community rates is calculated
				for a calendar quarter, and applies to the renewals in that quarter. The rates
				are to be effective for at least six months.
4.2 a set of community rates is calculated
				for the first month of a six-month period. The rates are designed to be
				effective for at least six months for accounts renewing in that month. Monthly
				trend factors are supplied that, when applied, provide community rates for the
				remaining five months of renewals, all of which are to be effective for a
				minimum of six months.
4.3 other
				methodologies that are submitted and approved by the Commissioner, but filings
				should be made no more frequently than once a quarter.
5. Medical underwriting and screening to
				exclude or individually rate small group insureds is not allowed Therefore, the
				community rating plan for a registered small group carrier may not contain any
				provisions for adjustments that are based on medical underwriting and/or
				medical screening.
6. Proposed
				community rates should be based upon reasonable projections of Vermont small
				group experience that has been incurred by the registered small group carrier.
				To the extent that the carrier's Vermont claims experience is not deemed to be
				fully credible, it can be combined with the carrier's small group experience
				from other states, if that experience is adjusted to reflect Vermont benefit
				differences, demographics differences, geographic differences, etc., that, if
				not otherwise made, would render the out-of-state experience invalid for
				Vermont insureds. Carriers may be required to provide such Vermont-based data
				as the Commissioner deems necessary.
Projection of the base claims experience forward to the
				  period for which the proposed community rates are designed to be effective
				  should be accomplished with the use of an appropriate health insurance trend
				  factor.
7. In addition to
				the expected claims costs, the carrier's community rates may contain
				appropriate allowances for administrative expense, taxes, profit, the cost for
				reinsurance, if any, and other elements used by the carrier.
8. For a particular small group, the approved
				community rates for a given benefit package may be adjusted for the following
				rating classifications:
8.1
				demographics
8.2 geographic
				area
8.3 industrial class
8.4 the group's experience
8.5 durational rating
8.6 tier rating
8.7 other factors that the Commissioner would
				approve
The total premium charged shall not deviate above or below
				  the community rate filed by the carrier by more than twenty percent (20%)
				  except for hospital or medical service corporations that qualify for tax-exempt
				  status, pursuant to Title
				  8 V.S.A., Section
				  4516.
8A. Notwithstanding the above, as of January
				1, 2000, no small group carrier may deviate from the community rate when
				writing new business. Additionally, small group carriers must phase out
				deviations in business existing as of January 1, 2000, according to the
				following schedule:
All renewals of business with anniversary dates on or after
				  January 1, 2000 through December 31, 2000: reduce deviation to 15%.
All renewals of business with anniversary dates on or after
				  January 1, 2001 through December 31, 2001: reduce deviation to 10%.
All renewals of business with anniversary dates on or after
				  January 1, 2002 through December 31, 2002: reduce deviation to 5%.
All renewals of business with anniversary dates on or after
				  January 1, 2003: no deviations.
9. The percentage increase in the premium
				charged to a small employer for a new 12-month period may not exceed the sum of
				the following:
a. the percentage change in
				the community rate for a new rating period; and any adjustment, not to exceed
				fifteen percent (15%) annually, due to a change in the deviation calculated for
				a new rating period based on a change in the case characteristics of the group
				as permitted under paragraph B(8) of this regulation.
b. Notwithstanding Section 9a of this
				paragraph, a carrier may seek relief from the premium increase limitation by
				requesting a determination from the Commissioner that such a limitation will
				have a substantial adverse effect on the financial soundness and safety of the
				carrier.
10. The
				Commissioner may exempt from the requirements of Title
				8 V.S.A., Section
				4080a(d)(1) an association
				as defined in Section 4079(2) of this title which:
10.1 offers a small group plan to a member
				small employer which is community rated in accordance with the provisions of
				this section. The plan may include rating classifications in accordance with
				this section;
10.2 offers a small
				group plan that guarantees acceptance of all persons within the association and
				their dependents; and
10.3 offers
				one or more of the common health care plans approved by the Commissioner.
The exemption referred to in this paragraph consists of
				  allowing an association to restrict access to small group accident and health
				  insurance to members of the association or a class of members of the
				  association with the approval of the. Commissioner. The Commissioner may revoke
				  or deny the exemption if it is determined that because of the nature, size or
				  other characteristics of the association and its members, the employees or
				  members are in need of the protection provided by this section or the exemption
				  would have a substantial adverse effect on the small group market.