Thursday, October 20, 2016

Rate Increase Rules

In re MVP Health Insurance Company2016 VT 111

By Elizabeth Kruska

You know what’s an enormous mess? Health insurance. I like to think I’m a smart person. I am completely confounded by health insurance. I suspect I am not alone.

Here’s what I think happened here. The Green Mountain Care Board (GMCB) is Vermont’s administrative agency charged with allowing/disallowing health insurance companies to provide certain policies in Vermont. GMCB also has to approve rates and any changes in rates. GMCB is supposed to review those filings and allow or disallow the rates and increases. There is a statute that enables GMCB to act, and requires that GMCB determines whether rates are affordable, whether they promote quality care, whether they protect solvency of the insurer, and if the rates are fair. There are timetables for filing, since if there is an issue, it has to be sorted out in a timely way. Insurance companies need to know if they can continue doing business in Vermont, and policyholders need to know if they need to find different coverage.

MVP, a health insurance company, provides health insurance via an association for farmers called Agri-Services. GMCB disallowed a rate increase filed by MVP for the Agri-Services policy. MVP appealed, arguing that it’s an unconstitutional delegation of power for an administrative agency to be able to allow or disallow rate increases. MVP also argued that GMCB didn’t make proper findings to support its conclusion of disallowance. They made a final argument regarding erroneous interpretation of the statute, but SCOV doesn’t even get that far because it reverses based on improper findings.

With respect to the constitutional argument, SCOV considers this de novo, or completely anew. Generally speaking, the legislature can make a law to give power to an administrative agency to enforce the law through rulemaking. This is unconstitutional only if the power given to the agency is “devoid of any conceivable standard to guide and constrain discretion.”

If you think about it logically, the legislature is there to make laws. But they don’t know everything about everything, and they don’t have time to micromanage every aspect of government. It would be cumbersome and weird to have to make very specific rules via statute for things like timetables on health insurance filings, how to get a driver’s license reinstated, steps to take to get a permit to repair a parking lot, and other nuts and bolts portions of everyday life. That’s why there are administrative agencies. They are staffed by people who know how to do these specific types of things, and they are more qualified to make these decisions.

They don’t get to do it in a vacuum, though. The agencies have to engage in rule-making. The ability to make rules has to come from a statute. The statute has to be clear enough that everyone is on notice about the extent of the agencies’ powers.

Here, GMCB was given the task of making sure rate increases are appropriate and balance different interests. GMCB apparently made rules about when and how health insurance companies are supposed to file rate increases so the policies can be approved for use in Vermont. The long and short of SCOV’s opinion on the constitutional issue is that there was no improper delegation here and the statute is sufficiently clear for appropriate rulemaking.

MVP also appealed the fact that GMCB made inadequate findings to support the denial of the rate increase. There were a few problems here. First, MVP did their filing late and also increased the rate way over what it had previously said would be its rate increase. There wasn’t time for GMCB to get back in touch with MVP about this, and also to put policyholders on notice that the rate was approved. Policyholders only had until December 15 to elect a plan, and by the time all the rate stuff got sorted out it was early November. MVP waived its right to a hearing, and agreed that GMCB could make its decision based on written filings, possibly because the timing of all this was very tight.

Now, usually SCOV doesn’t meddle with factual findings made by administrative agencies. SCOV realizes that the people who work in the agencies work on those particular issues, that they know what they’re doing, and that they likely understand the intricacies of the issues better than SCOV would. The justices recognize that they know how to apply the law, but they’re not going to go into the weeds on factfinding with respect to very intricate agency-level issues. It’s like going to a specialist when your primary care physician encounters a specific health issue that needs a closer look.

Just because there’s deference, though, doesn’t mean that agencies get to shirk their duties in making good findings. Parties always deserve to know why a particular decision is made in the way it is made, and what facts support the decision. SCOV found that here GMCB didn’t make thorough enough findings to support its conclusion that the rate increase would be disallowed. Sure, MVP was in the wrong by filing late, but GMCB had the duty to make very clear factual findings in order to support its denial of the rate increase.

So, SCOV reverses.

1 comment:

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