Insurance regulators across the nation may now access a grant to help them more closely scrutinize requested premium rate hikes by health insurers.

Kathleen Sebelius

The U.S. Department of Health and Human Services announced the initial availability of $51 million in Health Insurance Premium Review Grants, made possible by the Patient Protection and Affordable Care Act. The distribution is the first round of grants in what will be a $250 million grant program the HHS says will create and strengthen insurance rate review.

In a statement, HHS Secretary Kathleen Sebelius called the grants “an important step in putting consumers back in control of their health care.

“These new grants will help states protect consumers and small employers by holding insurers accountable for unreasonable insurance rate increases that have made coverage unaffordable for many American families,” she said. “By strengthening oversight of insurance premiums, these grants will help put affordable coverage back within the reach for Americans who have been hit hard by skyrocketing costs.”

Whether or not states currently have the authority to review health insurance rates, all states and Washington, D.C., are eligible for the first round of grants. The HHS is requiring participating states to submit a plan detailing how they will use the federal funds to develop or enhance its process of reviewing, approving, disapproving or modifying health premium requests. Those states with successful applications will be awarded $1 million through the first round of funding.

Jay Angoff, director of the Office of Consumer Information and Insurance Oversight, said the funds not only help states “strengthen” their oversight abilities but give states without rate review authority the means to establish their own programs.

“By subjecting rates to new public scrutiny, the oversight of premium increases will ultimately help ensure that consumers receive substantial value for their insurance dollars,” said Angoff, who also served as Missouri’s insurance commissioner.

The grants come after a letter last month by Sebelius to state governors and insurance regulators urging them to review their authority regarding rates and determine if they have the proper tools to approve insurance rates prior to them taking effect.

The HHS also noted that several provisions of the new health reform law strengthen its oversight of insurance premiums and rate hikes, as well as states’ oversight. Included in these provisions are the medical loss ratio cap of 80% in the small group and individual markets and 85% in the large group market and a requirement for insurers to justify “unreasonable” premium increases to both their state regulators and HHS