Hamm disapproves 14.9% Blue Cross Blue Shield group rate increase request
Posted on 10/10/2008
BISMARCK, N.D.-North Dakota Insurance Commissioner Adam Hamm announced today that he has disapproved a 14.9 percent rate increase request by Blue Cross Blue Shield of North Dakota (BCBS) for group policies.
Hamm said two main factors influenced his decision: the continued ability of BCBS to unilaterally change payments to health care providers and state law which requires that a rate be disapproved if the benefits provided are unreasonable in relation to the premium charged.
"Earlier this year for the purposes of justifying its rate increase request, Blue Cross Blue Shield told the department one thing regarding increases in payments to health care providers. But when it came to actually paying the health care providers, the company changed course and indicated it would keep a substantial portion of that money and claimed its contracts give it the right to do that unilaterally," Hamm said. "This is the first time an insurance company has done this in the history of North Dakota and it must change to get us back to a point where my department and I can properly analyze their rate increase requests."
Hamm said BCBS is aware of this issue and has come part way by indicating that it will not reduce payments to health care providers in 2008 or 2009. However, until that intent is reflected in the plain language of its provider contracts, the underlying issue still exists. Once BCBS changes its provider contracts to eliminate this issue, it can refile its rate increase request, he said.
Notwithstanding today's decision, the company's surplus still remains healthy. "North Dakotans can be assured that Blue Cross Blue Shield is in good financial shape," Hamm said.
Each year, BCBS submits rate increase requests to the Insurance Department, once for group policies and once for individual policies. More than 110,000 North Dakotans are covered under group policies through BCBS.
The Insurance Department thoroughly analyzes and approves rate changes before companies may implement them. Consumers and employers with questions are encouraged to contact the Insurance Department at 1-800-247-0560 or firstname.lastname@example.org.