When California’s Managed Risk Medical Insurance Board decided to create a state-run, pre-existing condition insurance plan in October, 2010 instead of using the “federal fallback” program, it didn’t mean complete autonomy for California officials.

The high-risk insurance program is funded through 2013 by a $761 million allotment from the federal government and federal officials have some guidelines about how that money is spent.

To entice more enrollees, the federal HHS lowered premiums on the pre-existing condition plans in states using the federal fall-back program. HHS requested that all plans, including state-sponsored ones, create a new child-only age band, moving it from birth to 14-years-old to include children up to 18. Secondly, HHS reinterpreted the payment plans for subscribers in each of the nation’s PCIP — or pre-existing condition insurance plan — regions.

The result: no increases for any PCIP subscribers. And in fact, enrollees aged 60 and older and 15 to 18 will see reductions in their premiums — two groups who on average pay the highest premiums. The changes will affect 12% of enrollees.

The reductions were greeted with applause by subscribers and state officials alike. Jeanie Esajian, deputy director of MRMIB, said the request by HHS to review the range between highest and lowest rates was the impetus for the changes.

“We are satisfied that our calculations have led to such a positive outcome,” she said. New rates, which will be effective on May 1, will hold until the end of the year. Subscribers will receive a credit or refund from premiums paid Jan. 1 to April 30 to reflect the lower rate.

Premiums for the highest payers have decreased by 35% compared to rates published at the onset of the program.

About 1,800 Californians have enrolled in the PCIP, which Esajian said was the second highest enrollment in the nation. “Most states have experienced a rather small number of subscribers,” she added.

She attributes the low number to the cost of the plan and to a requirement that subscribers must have been without “creditable health coverage” for at least six months prior to joining the pre-existing condition plan.