WSR 13-05-077




[ Insurance Commissioner Matter No. R 2013-01 -- Filed February 19, 2013, 4:12 p.m. ]

     Original Notice.

     Preproposal statement of inquiry was filed as WSR 13-02-095.

     Title of Rule and Other Identifying Information: Geographic rating area designation.

     Hearing Location(s): Training Room, T-120, 5000 Capitol Way South, Tumwater, WA, on March 26, 2013, at 11:00 a.m.

     Date of Intended Adoption: March 28, 2013.

     Submit Written Comments to: Meg L. Jones, P.O. Box 40258, Olympia, WA 98504, e-mail, fax (360) 586-3109, by March 25, 2013.

     Assistance for Persons with Disabilities: Contact Lorie Villaflores by March 25, 2013, TTY (360) 586-0241 or (360) 725-7087.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed rules establish the geographic rating areas that nongrandfathered individual and small group plans would be required to use in adjusting their premium rates with a geographic factor, for plans offered beginning January 1, 2014.

     Reasons Supporting Proposal: If the state does not designate geographic rating areas, the United States Department of Health and Human Services (HHS) stated in 2012 proposed rules (proposed 45 C.F.R. 147.102 (b)(1)) that it intends to do so. After a review of cost variance and current practices by Washington domestic carriers, the commissioner determined that a determination of geographic rating areas, based on county and organized in comparison to an index rating county (King County) merited proposal as the state's designation of geographic rating areas. Carriers have advised the commissioner that one geographic area would negatively affect rates; this proposed rule making focuses on selecting the geographic rating areas for Washington.

     Statutory Authority for Adoption: RCW 48.02.060, 48.44.050, 48.46.200, 48.110.150.

     Statute Being Implemented: RCW 48.20.025, 48.20.028, 48.21.045, 48.44.017, 48.44.023, 48.46.062, 48.46.066.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Office of the insurance commissioner, governmental.

     Name of Agency Personnel Responsible for Drafting: Meg Jones, 302 Sid Snyder Boulevard South, Olympia, WA 98504, (360) 725-7170; Implementation: Beth Berendt, 5000 Capitol Boulevard South, Olympia, WA 98504, (360) 725-7117; and Enforcement: Carol Sureau, 5000 Capitol Boulevard South, Olympia, WA 98504, (360) 725-7050.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The entities affected are not small businesses, per the definitions in chapter 19.85 RCW.

     A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Meg Jones, 302 Sid Snyder Boulevard, Olympia, WA 98504, phone (360) 725-7170, fax (360) 586-3109, e-mail

February 19, 2012

Mike Kreidler

Insurance Commissioner


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


WAC 284-170-252   Geographic rating area designation.   (1) The following geographic rating areas are designated for Washington state for nongrandfathered individual and small group plans:

     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.

     Area 6: Non-Washington rating area: The geographic rating areas for those enrollees residing in areas outside Washington state.

     (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.