The request to increase the rates for health insurance policies by New York insurance providers has instigated the New York State Department of Financial Services to launch a detailed probe to verify the credibility of the information provided by the insurance providers and HMOs (health maintenance organizations).
The superintendent of Financial Services, Benjamin Lawsky, said that since increasing the cost of health insurance policies is going to significantly increase the financial burden for policy holders, it is important to ensure that the data being filed by the insurance providers in the state is accurate and authentic. Manipulations have to be tracked and action should be taken to curtail a cascading effect.
He also went on to say that the in-depth audit that is being conducted now will help them determine the actual figures. These audits will give a better insight into the details of broker commissions, administrative costs and other financial aspects. This audit will also enforce the need for health insurance companies to be more careful while filing their financials and ensure they take relevant steps to levy better control on the entire process.
The $4.4 million grant that the state financial services department received from the United States Department of Health and Human Services will be used to fund the ongoing audits. The human services department issued this grant to the financial services department to ensure enhanced public access, improved reviews for premiums and better transparency and understanding of the calculation of health insurance premiums and associated terms and conditions.
All the health maintenance organizations and insurance companies offering health insurance policies will undergo an onsite audit to ensure fair pricing and compliance to the standards set by the state for health insurance policies. All health insurance policies issued to individuals as well as small businesses will be assessed as a part of this audit.
The current rate requests filed by the insurance providers will also be reviewed as a part of the auditing process. The audit will also examine all the data related to claim reserves, premiums, administrative expenses and more. Insurance companies will be informed in advance if their proposals will be audited. One of the recently implemented laws stipulates that health insurance providers must submit a formal proposal to the state’s financial services department for review before increasing the premiums for any of their policies at least two months in advance.
