Effective Date of Rule: Immediately.

     Purpose: To provide issuers with the state specific requirements for applying geographic rating area factors to nongrandfathered individual and small group health benefit plans for 2014.

     Statutory Authority for Adoption: RCW 48.02.060, 48.44.050, 48.46.200.

     Other Authority: Section 2701 of the PHSA; 45 C.F.R. 147.102.

     Under RCW 34.05.350 the agency for good cause finds that state or federal law or federal rule or a federal deadline for state receipt of federal funds requires immediate adoption of a rule.

     Reasons for this Finding: Absent state specific designation of the geographic rating areas, the federal government's default geographic rating area would apply. Medical care costs vary in different regions of the state. The application of the federal default for this premium rate factor would result in premium rates that do not account for these variations.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 2, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 2, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 2, Amended 0, Repealed 0.

     Date Adopted: March 19, 2013.

Mike Kreidler

Insurance Commissioner

OTS-5293.4

NEW SECTION
WAC 284-170-250   Geographic rating area factor development.   (1) For nongrandfathered individual or small group health plans offered, issued or renewed on or after January 1, 2014, if an issuer elects to adjust its premium rates based on geographic area, the issuer must use the geographic rating areas designated in WAC 284-170-252.

     (2) The premium ratio for the highest cost geographic rating area, when compared to the lowest cost geographic rating area, must not be more than 1.15.

     (a) King County is the index geographic rating area for purposes of calculating the premium ratio. The geographic rating area factor for the index area must be set at 1.00.

     (b) A health-status related factor may not be used to establish a rating factor for a geographic rating area. Health factor means any of the following:

     (i) Health status of enrollees or the population in an area;

     (ii) Medical condition of enrollees or the population in an area, including both physical and mental illnesses;

     (iii) Claims experience;

     (iv) Health services utilization in the area;

     (v) Medical history of enrollees or the population in an area;

     (vi) Genetic information of enrollees or the population in an area;

     (vii) Disability status of enrollees or the population in an area;

     (viii) Other evidence of insurability applicable to the area.

     (3) Assignment of a factor to a geographic rating area must be actuarially sound and based on provider reimbursement differences. An issuer must fully document the basis for the assigned rating factors in the actuarial memo submitted with a rate filing.

     (4) The geographic rating area factors must be applied uniformly to individuals or small groups applying for or receiving coverage from the issuer.

     (5) For out-of-state enrollees covered under a health benefit plan issued to a Washington resident, an issuer must apply the geographic rating area factor based on the primary subscriber's Washington residence. For out-of-state enrollees who are covered under a health benefit plan issued through an employer whose primary place of business is Washington, an issuer must apply the geographic rating area factor based on the employer's primary place of business.

     (6) This section does not apply to stand alone dental plans offered on the Washington health benefit exchange.

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     Area 1: Index geographic rating area: King County.

     Area 2: Clallam, Cowlitz, Grays Harbor, Island, Jefferson, Mason, Lewis, Kitsap, Pacific, Pierce, San Juan, Skagit, Snohomish, Thurston, Wahkiakum, and Whatcom counties.

     Area 3: Clark, Klickitat, and Skamania counties.

     Area 4: Ferry, Lincoln, Pend Oreille, Spokane, and Stevens counties.

     Area 5: Adams, Asotin, Benton, Chelan, Columbia, Douglas, Franklin, Garfield, Grant, Kittitas, Okanogan, Walla Walla, Whitman, and Yakima counties.

     (2) The commissioner will review the geographic rating area designation in this section not more frequently than every three years, beginning January 31, 2016. The commissioner will publish changes in the geographic rating area designation within sixty days of the review date.

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