WellPoint rate hikes face further scrutiny, says it will review rates more closely

WellPoint Inc., responding to criticism and close scrutiny from lawmakers and officials, will add "new layers of oversight to pricing practices," The Wall Street Journal reports. WellPoint CEO Angela Braly sent a memo to 40,000 employees saying that the company will "implement third-party reviews of its 2010 rate filings and investigate why its actuaries did not find miscalculations uncovered last week by the California Department of Insurance. ... Last week, the WellPoint unit in California withdrew its request to increase rates for individual plans by up to 39% after actuaries hired by the state found several mistakes, such as double counting the price effect of policyholders as they age." Health and Human Services Secretary Kathleen Sebelius sent a letter to states asking them to find out if those kind of errors are in their states on rate increase requests for individual policies (Johnson, 5/5).

Los Angeles Times: In California, in "response to the latest criticism, the insurer maintained that its rates across the country are sound, justified and comply with all regulations. A company spokeswoman said the errors that led to the California rate hike cancelation were unique. … California Insurance Commissioner Steve Poizner announced that he is examining the accuracy of claims data used by Anthem to validate subsequent filings as the insurer prepares to submit new rates this month. State law requires that insurers spend at least 70% of premium revenue on medical claims." WellPoint is the largest insurer in America by membership. It covers 33 million people in 14 states (Helfand, 5/6).

The Hartford Courant: Similar efforts are underway in Connecticut. "Attorney General Richard Blumenthal and state Healthcare Advocate Kevin Lembo wrote to Gov. M. Jodi Rell on Wednesday asking for an independent audit of Anthem Blue Cross and Blue Shield in Connecticut, a WellPoint subsidiary. An independent audit, which Anthem should fund, will determine if the company made some of the same mathematical and actuarial mistakes a WellPoint subsidiary made in justifying a rate request in California" (Sturdevant, 5/6).

Meanwhile, the San Francisco Chronicle reports that "Blue Shield of California customers have reported recent rate increases of as high as 29 percent. The insurer said a few consumers may see even higher rate hikes, but the average would be 17 percent. .... Officials from Blue Shield, which is based in San Francisco, said rates are increasing as members hit their annual renewal dates. 'We hate to raise rates as high as we sometimes have to, but we need to cover the medical expenses,' said Tom Epstein, a vice president of Blue Shield, adding that he believes the rates would withstand any additional regulatory scrutiny" (Colliver, 5/6).