ALBANY, N.Y. (AP) — New York authorities will be investigating the accuracy of data that health insurance companies and HMOs submit to justify rate increases.
Financial Services Superintendent Benjamin Lawsky said Wednesday that the new investigation will take the time needed to scrutinize data to make sure it accurately accounts for costs and spending. The unannounced audits will be in addition to the regular review of rate requests that must be done within 60 days before the department approves or rejects increases.
"At a time when spiraling health insurance costs are an incredible burden for working people, it is essential that we ensure that rate requests are based on fair, accurate information that has not been manipulated," Lawsky said.
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Lawsky said errors in applications for rate increases could result in refunds to customers, fraud enforcement, or requirements that companies change the way they report their finances.
The audits will be paid for with a $4.4 million federal grant. The Obama administration, under its health care overhaul law, has encouraged states to require greater scrutiny of data and make rate-setting more open to public review.
Leslie Moran of the New York Health Plan Association said the additional reviews will be unnecessary and a waste of tax dollars.
"It really does nothing to address the underlying causes of rising health insurance premiums which is the increasing costs of providers, and prescription drug costs, high utilizations and new mandates," Moran said. She said the new audits could force more spending by health plans, on top of recent state Legislature mandates such as greater coverage for people with autism.
"That's a disappointing reaction," Lawsky said in an interview. "I would have expected a reaction along the lines of, 'We're happy to comply with this audit because we've been very honest in setting these numbers.' If they are going to resist and put out statements like that, it's disappointing and, to me, it's eyebrow raising."
"What do you have to worry about if you are doing this honestly?" Lawsky said.
Lawsky said insurers won't be notified that their rate increase is getting the extra review, which is aimed at creating a further deterrent against providing inaccurate or unreliable data.
Lawsky said the reviews will make sure companies have enough controls and oversight to be sure data is accurate and identify areas where costs can be cut. The state regulates private insurance companies that serve about 2.5 million New Yorkers.
Last year, the Financial Services Department opened companies' requests for rate increases to the public for comment.
Under recent law, the department gets 60 days to review an increase request and issue its required "prior approval." Then, a rate increase can be charged.
But Lawsky says several companies often apply for rate increases at about the same time, requiring a complex consideration of several proposals at once. A second, deeper review is now needed, he said.
Before companies were required to obtain approval by the department, premiums increased about 14 percent a year. The department has since granted increases, but lowered them to an average of about 8.2 percent, lower that the 12.7 percent requested, Lawsky said.
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