11 insurers must refund $114M for overcharging premiums

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Eleven insurance companies operating in New York--including Aetna, UnitedHealth, and WellPoint--must refund a total of $114.5 million to policyholders who were overcharged for health insurance premiums last year.

Insurers are required under state law to maintain an 82 percent medical-loss ratio (MLR); otherwise, they must refund the difference to members for charging too much for their health insurance. All refunds must be issued by Dec. 15, Bloomberg notes.

Gov. Andrew Cuomo ordered the refunds, saying they "should serve as a message to companies that we are watching, and we will not tolerate any action that wrongly hurts the finances of the people of New York," according to a Nov. 9 statement.

But the insurers involved have a different opinion of the situation. They allege the refunds represent reimbursements on 2010 rates, which were filed in 2009 before the state passed its Prior Approval law and implemented its higher 82 percent MLR standard.

"If the law had not been applied retroactively, we would have had the opportunity to price our business appropriately," Aetna spokeswoman Cynthia Michener told The Hartford Courant.

Similarly, HealthNow said applying the law retroactively violates due process, so it asked the New York state Supreme Court for a declaratory judgment, according to Buffalo Business First. "We believe a change in the law that increased the MLR retroactively to our company's 2009 filing for 2010 rates will cause a significant reduction of HealthNow's financial reserves and prudent fiduciary plan, ultimately impacting current and future customers' rates," said Julie Snyder, HealthNow's director for corporate relations.

The New York Health Plan Association supports the insurers' objections. "In applying the higher MLR standard retrospectively, the Department of Financial Services changed the rules in the middle of the game," said Leslie Moran, the association's senior vice president. "DFS wrongly characterizes this as overcharging. DFS also continues to overlook the real factors of New York's higher premiums, which are higher than national costs as well as the taxes imposed on health insurance."

The list of insurers, according to Cuomo's statement, includes:

Health Payer
Total Refund
 Empire  $61,080,867
 Excellus  $21,426,603
 Aetna Health  $11,495,614
 Health Net of New York  $5,052,467
 Oxford Health Insurance Co.  $4,838,675
 HealthNow  $4,492,327
 GHI  $4,168,935
 MVP Health Plan  $1,319,640
 CDPHP Health Plan  $487,768
 HIP Health Plan of Greater New York  $182,194
 ConnectiCare of NY  $15,462

To learn more:
- check out the Bloomberg article
- see the Buffalo Business First article
- read The Hartford Courant article
- read Gov. Andrew Cuomo's press statement

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