Costly safety net for policyholders

 

Friday, Mar 06,2009, 4:19:27 PM   Click:

Copyright 2009 Los Angeles TimesAll Rights Reserved Los Angeles Times

18 February 2009 Wednesday Home Edition Correction appended

SECTION: MAIN NEWS; Business Desk, Part A, Pg 1

LENGTH: 1320 words


TITLE: The cost of safety net for policyholders, two SOEs exceed premium rates for post-COBRA policies.

Signature: Lisa Girion



Two of the largest insurers in California have been selling health coverage to be a safety net for the state of sickness and unemployment premiums that exceed the State rate published in some cases by thousands of dollars per year.

Two other companies - Aetna and Health Net - uniformly adhere to the rule issued rates. But an investigation revealed that Times Blue Shield of California's premiums are more than 55% higher. And to those charged by Anthem Blue Cross were up to 36% higher.

Affect the rate of more than 13,000 people with Anthem and coverage of more than 6000 with the Blue Shield policy.

When the higher rates were reported to Anthem, the company said it had made a mistake and was quick to make amends. However, Blue Shield has defended its rates. He says he is not obliged to follow the issued rate structure, because the company did not consider it legally binding. He also says it reflects its rates annually to the state.

Regulators have acknowledged that they had not discussed these premiums for years. But they have recently initiated investigations.

The cover in question was created in 1996 by the federal Health Insurance Portability and Accountability Act, or HIPAA. A key objective was to ensure that people who lost their jobs have been secured. HIPAA works in tandem with COBRA, a federal law that extends to employment, insurance coverage group, entirely dependent on the person, for a maximum of three years after the person leaves or loses his job. (COBRA means Consolidated Omnibus Budget Reconciliation Act, the 1986 Act which created the program.)

Under HIPAA, insurers must offer coverage options for their most popular for people whose COBRA coverage has expired, regardless of pre-existing conditions.

The increase in premiums charged by insurers in California, which vary depending on the age of the insured and the region, are added. For example, Blue Shield monthly premium for a family of four in Los Angeles with a 40 year old primary insurance is $ 1461. That is $ 401 per month, or $ 4812 per year, above the cap.

Anthem of the 2009 monthly premium for a family was $ 1356 - $ 296 per month, or $ 3552 per year, above the cap.

In response to The Times' findings, Anthem conducted a review and found errors in its tariffs, spokeswoman Peggy Hinz said.

So far, Anthem has determined that it was too enrollees aged 60 to 64 since 2006. Anthem said it appeared to have been overloaded, and it was currently reviewing the costs to all members since 2006. The company is sending letters to members who have been overbilled May and promised a refund of overpayments, with interest. Anthem members on issues May call (800) 636-8991.

Blue Shield, on the other hand, maintained its rate and maintained that he had done nothing wrong.

"We believe that we are obeying the letter of the law, and there was never any indication that we are not," said spokesman Tom Epstein.

Blue Shield, a nonprofit organization based in San Francisco, said that even with rising interest rates, it has lost about $ 7 million on its HIPAA coverage last year, and expects to lose up $ 20 million on these policies this year.

"It was a nice consistent money loser," said Epstein.

For consumers, HIPAA coverage is expensive, even under the state issued rate structure. Population without pre-existing conditions can get health insurance cheaper on the open market. Those who buy HIPAA tend to have medical coverage continues with the conditions that would otherwise most insurers refuse to cover.

"These people are generally pre-existing - serious health problems - who desperately need health insurance and health care, but are blocked by the market," said Rep. Jackie Speier (D-Hillsborough).

Even those with minor medical imperfections are in the need to ensure coverage of HIPAA.

One 63-year-old woman in the Bay Area tried to buy insurance on the market after its failed COBRA coverage four years ago. But it was rejected for what it calls "piddly reasons, including maintenance visits to chiropractic and the use of Fosamax, a drug that helps to absorb calcium from bone. It led to a HIPAA policy Anthem.

Even with the hymn promised rollback rate, it will pay more than $ 700 per month for his coverage HIPAA - too much, she says, for a policy deductible of $ 1500.

"It is very expensive," she said in an interview. "I need it in case of total catastrophe."

As a state legislator in 2000, Speier wrote a bill to limit the premiums HIPAA, because the policies have become so expensive that they in effect excluded the people of the coverage was supposed to help.

Speier law that took effect in 2001, prohibits insurers from charging more than the average premiums paid by subscribers in the state of high risk to the insurance coverage held by preferred provider organizations.

Shortly after the adoption of the law, regulators have met to work on the details of implementation - including how to calculate the average premium paid, "said Sarah Soto-Taylor, a spokesman for State Insurance Program Major Risk Medical, which runs the high risk group.

The Department of Insurance and the Department of Health Management "put us all together and they had discussions on what would be the best way to provide that information to them," she said. "L ' agreement, and historically we have been asked to provide these services, it is weighted average - weighted by the number of [political], for every region, every age group. "

Blue Shield's Epstein said the company was aware of the statement issued rates. But, he says, the company has developed its own method to calculate the rate of almost from the beginning and never saw a reason to change.

In 2004, e-mail to the State Department of Insurance, a lawyer for Blue Shield said that instead of the state of the weighted average, the company used a "straight average method" to calculate rates. The Blue Shield lawyer said that under certain circumstances, a weighted average will result in higher rates for everyone. "

But The Times analysis found that the reverse was true. Blue Shield premiums for 2004 and subsequent years were higher than the weighted average rate of most consumers.

Epstein explains the difference as an "innocent mistake" by a lawyer who said the regulation in his e-mail that it was "not an expert opinion."

There is no evidence that the Department of Insurance responded to Blue Shield's e-mail. And regulators have not taken action against an insurer on HIPAA rates.

But in recent months, the two regulators were aware of changes in premiums and HIPAA opened investigations that are ongoing.

"We really view this alarm," said Lynne Randolph, a spokesperson for the ministry of health care management. "If people are being charged more than they should be, especially in this period of economic crisis, the Department of Management of health care will happen in the bottom of things. And it could include an order to reimburse consumers. "

After its initial review, the Department has notified Blue Shield that its rate could not comply with law.

The company defends its rates in a letter to the ministry, saying he had used a "straight average" for years and that regulators objected.

Bryan Liang, executive director of the Institute of Law Studies at the health of the California Western School of Law, San Diego, said the law does not permit an insurer to choose the definition of "average."

Insurers were allowed to "game the system using the method they want to push the premium, which is certainly not what the authors or the legislature," said Liang. "The issue is affordability and a bright line is permitted to charge."

Epstein said Blue Shield would be to recalculate its rates if ordered.

"If our regulations to the interpretation of the law is that we should use the weighted average, we move from the weighted average," he said.

--

lisa.girion @ latimes.com

CORRECTION-DATE: February 19, 2009

CORRECTION:

Health insurance: An article Wednesday in Section A about safety-net health insurance has a bad rate telephone number for Anthem Blue Cross members to call on the cover. Anthem's customer service line can be reached at (866) 636-8991.

GRAPHIC: GRAPHIC: Premium differences CREDIT: Los Angeles Times

LOAD-DATE: February 19, 2009

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