State Blasts Insurers for Hiding Rates

Jul 10, 2014

Florida health plans were wrong to use a state "trade secrets" law to hide their rate proposals from the public, the Office of Insurance Regulation says in letters to 15 insurers. 

Credit Florida Office of Insurance Regulation

In what became a nationwide embarrassment for Florida, insurers falsely placed a "zero" on the public rate-filing form for 2015 in the run-up to the June 27 reporting deadline. OIR officials say their intention was apparently to hide their actual rate proposals from one another, but it backfired when Health News Florida reported on the unusual phenomenon.

The trade-secrets law was never intended for that purpose, and its use is blocking the state's goal of making rate proposals  "transparent," OIR Assistant General Counsel Virginia Christy wrote in a July 3 letter to plans participating in the 2015 federal Health Insurance Marketplace.

Because of the way the trade-secrets law is written, OIR says, it cannot just release the information to the public. It must wait for someone to request the document and then give the companies 30 days' notice that it intends to release it, so that they can try to block it through court action. The July 3 letters provided that official notice.

The first public records request was filed June 30 by Bryan Trochessett of Chandeleur Investment Consulting, LLC, according to Christy's letter.  Later, other requests were filed by reporters and the consumer group Florida CHAIN.

CHAIN's Policy Director Greg Mellowe said in a July 8 letter to OIR that the agency should release the rate proposals right away because the trade-secrets claim is phony.

Mellowe wrote that the insurers and HMOs "are intentionally misleading the public" and added a zinger for state officials "For its part, if OIR has knowingly allowed such false information to be reported and then defended such reporting, it may have facilitated insurance fraud."

Most of the companies that submitted proposed rates for 2015 plans to be offered through the federal exchange blocked them from view on the OIR public website by placing a "zero" in the slot where the rate request should go.  That implied that the companies did not plan to raise or lower their rates for the coming year.

When Health News Florida reported this unprecedented phenomenon on June 24, raising questions about whether it was accurate, OIR took down the website and labeled it with a disclaimer, saying the information on it may not be correct.

But by that time, the false information had made its way around the country in blogs, tweets and news reports. The proposed rates are being closely watched by both proponents and critics of the Affordable Care Act nationwide.

When it placed the disclaimer on its website, OIR said that the proposed rates for 2015, which it knows but isn't ready to publish yet, included a mix of rate hikes and decreases. OIR plans to release the rates publicly in a report at the end of July.

That plan could encounter delays if one of the insurers that invoked the trade-secrets claim petitions a court to hold hearings on the issue. But OIR does not expect that to happen, said spokesman Harvey Bennett. Health News Florida contacted half a dozen plans this week, and none said it planned to contest the release in court.

Federal health officials are playing the primary role in approving Florida's 2015 plan rates to be offered through Healthcare.gov.  While that job is usually up to OIR, the Florida Legislature told the state agency to stay out of it until 2016. State officials, particularly House Republicans, have ordered agencies not to participate in anything connected to what they call "Obamacare."

The trade-secret flap occurred in part because insurers filed their proposed rates through an online portal called the I-File System, which does not offer the option of withholding the rate as a trade secret. That's why the insurers inserted a "zero."

I-File "was created so that rate filing and rate change information could be reviewed by the public," Bennett said in an e-mail. "It was not designed to offer the option of withholding trade secret information from the public rate summary.

"The overall rate request was never intended to be a trade secret.  In fact, the Office has authority to hold public hearings on rates.  How would you hold such a hearing without disclosing the proposed rate?" 

Traditionally, the "trade secret" label has been limited to the actuarial estimates used to formulate the proposed rates, Bennett said.