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NY Regulators Push Health Carriers to Be More Transparent on Rate Requests

Source: A.M. Best

Posted on 17 Oct 2011

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Benjamin Lawsky, New York State's superintendent of financial services, has ordered health insurance carriers to release documents that support their efforts to raise premiums in the state. That order, which goes into effect in November, comes just one year after his office was given prior approval authority for health lines.

In the past, health insurance carriers have not made those supporting documents public, arguing they contain trade secrets that competitors could use to better position themselves in the market. But Lawsky and his staff have argued the prior-approval law makes public comment a part of the process and the public can't be expected to submit public comment on increases if they don't see the supporting documents.

"Our basic feeling is that the No. 1 priority of the prior-approval process should be transparency. The legislation that brought back prior approval made public comment part of the process, and the public should be able to see these memos, just like in the 12 other prior-approval states where carriers are required to make supporting data public," said David Neustadt, a spokesman for the department.

Neustadt said much of the data health insurers in the state have been fighting to keep from being disclosed has to be released anyway in submissions to the Department of Health and Human Services and other federal agencies under the Patient Protection and Affordable Care Act.

The New York Department of Financial Services informed health insurers in the state of Lawsky's order in a September letter sent to all carriers in the state. The letter said objections had to be filed within 10 days. Two companies opted not to file objections but 10 other companies responded with letters, saying releasing the supporting documents would put them at a competitive disadvantage, Neustadt said.

Regardless of those objections, the companies are required to release the documents unless they obtain a court injunction allowing them to remain secret.

Last year, New York regulators reported that within a month of the prior approval law going into effect, insurers began seeking lower rate increases than they had in the past. At the time, Insurance Superintendent James J. Wrynn said, "We projected that prior approval would have a 2-3% impact on rates, and on average we reduced the rate increase requests by 2.5%".