Announcement of audits triggers “battle of press statements”

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A news release earlier today about a federal grant the state Department of Financial Services will use to audit insurers prompted a positive statement from the state Health Care for All Coalition but criticism from the New York Health Plan Association, which represents managed-care plans across the state. The criticism was followed by a strongly worded statement from Benjamin Lawsky, superintendent of financial services.

Lawsky’s announcement was that, thanks to a $4.4 million federal grant, the agency “has launched a wide-ranging probe of the accuracy of data used by insurers and health maintenance organizations (HMOs) to request health insurance rate increases.”

Leslie Moran, senior vice president of the Health Plan Association, said the new level of audits “seems duplicative, unnecessary and wasteful of taxpayer dollars” given that Lawsky’s agency already has broad regulatory authority over health plans. She said the audits will be focused on administrative costs and broker commissions and won’t get at the primary reason for higher health-insurance premiums — the rising cost of medical care.

A recenly adopted state law requires insurers to get prior approval from the state for premium hikes.

Moran said in an interview that her group had not intended to get into a “battle of the press statements,” but the tone of the state’s release was troubling. “Plans feel they have been making an honest and a significant effort to respond to the department’s requests for information and for data and it just doesn’t further theprocess to kind of put a bull’s eye on the backs of health plans and use them as a target when the real target is the costs of health care,” she said, including higher provider and drug costs and increased utilization.

That prompted this response from Lawsky:

“The health insurance industry’s surprising and disappointing response to our audits of rising health insurance costs is a red flag. If insurers are setting rates honestly and fairly they should have nothing to hide and should welcome audits that will help ensure consumers understand how rates are set.”

Lawsky said in an interview that he was “frankly shocked that they would call our audit duplicative and a waste of money.” Consumers deserved to know in detail how insurers are setting rates and what is driving the numbers. It’s possible the increasing rates is the result of rising health-care costs and is not the fault of the insurers, he said.

Meanwhile, Health Care For All New York, a coalition of more than 120 consumer advocacy groups, applauded the news.

“It is gratifying to see the insurance department taking steps to contain costs for consumers and small businesses, and to improve transparency in the rate review system,” Elisabeth Benjamin of the Community Service Society said in a statement.

The New York State Conference of Blue Cross Blue Shield Plans praised the Department of Financial Services’ efforts.

“The department now has extraordinary regulatory and audit powers to determine and control the underlying costs negatively impacting health care premiums,” Deborah Fasser, a spokeswoman for the conference, said in a statement. “It is our hope that the department will direct resources to control the underlying causes and costs impacting the rates of coverage.”

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