Washington Bill Could Reduce Payor Competition

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Written by Rob Kurtz

Wednesday, 05 March 2008

A bill giving control of healthcare premium increases to the Washington state insurance commissioner could reduce insurance premium increases in the state, but it may also reduce new payor competition, say critics.

Washington already has fewer payors than many other states, and challengers of the bill believe the decision to give control of premium increases to the insurance commissioner could serve as a disincentive for new payors to consider the state for business, according to published reports. Lack of payor competition can make negotiating fair reimbursement rates more difficult for surgery centers because payors are less threatened by the possibility that an organization will take its business elsewhere.

Some of the proposed regulations include:

... the commissioner may disapprove any agreement if the benefits provided therein are unreasonable in relation to the amount charged for the agreement. Rates, or any modification of rates, for individual health benefit plans may not be used until sixty days after they are filed with the commissioner.

And:

…No agreement form or amendment to an approved agreement form shall be used unless it is first filed with the commissioner.

The increased scrutiny and regulation may deter new competitors from entering the already-tight Washington market, critics say.

"If anything, this is going to help the insurance companies protect their market," says Rep. Bill Hinkle, according to reports. "Because nobody is going to come here to compete."

Supporters of the legislation (SB 5261), which is expected to be signed by the governor, are hoping it will help curb premium increases, some of which were as high as 40 percent in 2007.

To view the most current edition of the bill, click here.