Covered California for the Individual Market Rates. Covered California for the Individual Market, rates shall be established through an annual negotiation process between the Contractor and Covered California and are set for the applicable year. The parties acknowledge that (1) the Agreement does not contemplate any mid-year rate changes for Covered California for the Individual Market in the ordinary course of business, and (2) the annual negotiation process must be supported by Contractor through the submission of information in such form and at such date as shall be established by Covered California to provide Covered California with sufficient time for necessary analysis and actuarial certification.
Covered California for the Individual Market Rates. For Covered California for the Individual Market, rates shall be established through an annual negotiation process between the Contractor and Covered California for the following calendar year. The parties acknowledge that: (1) the Agreement does not contemplate any mid-year rate changes for Covered California for the Individual Market in the ordinary course of business, and (2) the annual negotiation process must be supported by Contractor through the submission of information in such form and at such date as shall be established by Covered California to provide Covered California with sufficient time for necessary analysis and actuarial certification. In Covered California’s review of the detailed rationale for each plan’s rate development, it has generally taken the view that absent extraordinary circumstances, as determined by Covered California, profit margins over the range that have historically been considered to be reasonable would be unacceptable. Therefore, for future Plan Years should Contractor receive profits or incur losses due to shifts in Federal policy or ACA-related judgements favorable to the Contractor, Contractor should factor profits into a reduction of its premium rates, or increase its profit margin to recoup losses. These adjustments shall be consistent with applicable State and Federal laws, including the medical-loss ratio laws. Covered California will utilize the annual negotiation process in future years to consider how such profits or losses should be factored into future premium rates. In doing so, Covered California will consider the Contractor’s documented historic profit margin with Covered California and the need for Contractor to maintain sufficient regulatory reserves. The parties understand that California’s State Regulators conduct their own independent review of rates subsequent to the parties’ negotiation. In the event the Contractor seeks to invoke this contract provision, Covered California would convey to the regulator its perspective on the reasonableness of profit margins and reserves given the exceptional circumstances.
