Individual Exchange Rates. For the Individual Exchange, rates shall be established through an annual negotiation process between the Contractor and the Exchange and are set for the applicable year. The parties acknowledge that (1) the Agreement does not contemplate any mid-year rate changes for the Individual Exchange 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 the Exchange to provide the Exchange with sufficient time for necessary analysis and actuarial certification.
Individual Exchange Rates. For the Individual Exchange, rates shall be established through an annual negotiation process between the Contractor and the Exchange for the following calendar year. The parties acknowledge that: (1) the Agreement does not contemplate any mid-year rate changes for the Individual Exchange 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 the Exchange to provide the Exchange with sufficient time for necessary analysis and actuarial certification. In the Exchange’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 the Exchange, profit margins over the range that have historically been considered to be reasonable would be unacceptable. The Exchange understands that considerable uncertainty exists with respect to potential enrollment changes and certain Federal laws and policies that may impact premium rates for the 2018 plan year. The Exchange recognizes that “pricing for this uncertainty” could lead health plans to increase premiums in amounts that would have immediate and significant harmful impacts on consumers. In the context of this uncertainty and in recognition of Contractor’s establishing prices for the 2018 year to allow for that heightened uncertainty, should Contractor incur additional losses in plan year 2018 due to shifts in Federal policy and other uncertainties, the Exchange may allow Contractor, over the course of the next three years (plan years 2019, 2020 and 2021) to increase its profit margin to recoup such losses. Likewise, should Contractor receive profits due to shifts in Federal policy and other uncertainties, Contractor should factor such profits into a reduction of its premium rates over the next one to three plan years. These adjustments shall be consistent with applicable State and Federal laws, including the medical-loss ratio laws. The Exchange will utilize the annual negotiation process in future years to consider the duration and amount to supplement Contractor’s profit margins that may be appropriate to recoup such losses for the purpose of building or maintaining adequate reserves; or to deduct the unanticipated profits for the 2018 plan year from Contractor’s profit margins. In doing so, the Exchange will consider the Contractor’s documented historic profit margin with t...
