Under provisions of the Patient Protection and Affordable Care Act (PPACA), beginning Sept. 1 states and the federal government will begin reviewing health premium increases in the small group and individual market, with any increase above 10 percent triggering an automatic need for the insurer to submit detailed justification.

The Centers for Medicare and Medicaid Services (CMS) will conduct the reviews for nine states not qualified to do so, and the remaining 41 states will handle their own cases. CMS will conduct rate review covering both the individual and small group markets in Alabama, Arizona, Idaho, Louisiana, Missouri, Montana and Wyoming. It will conduct small-group market reviews in Pennsylvania and Virginia.

“These new rules, combined with the funding states are receiving under the Affordable Care Act, will trigger much closer scrutiny of health insurance rate hikes,” says DeAnn Friedholm, director of Consumers Union's health reform campaign.

“But ultimately, it will be up to the states to protect consumers when rate increases are found to be unreasonable. States need to make sure they have the tools necessary to prevent unreasonable rate increases from going into effect. And some states that have the authority to curb rate hikes need to act more aggressively to prevent insurers from gouging consumers.”

When an insurer submits a rate hike higher than 10 percent, CMS and the state agencies will post that justification on their Web sites, as will the insurer.