MVP, other insurers to make refunds

PHOTOGRAPHER: Michael Lamendola

Schenectady-based MVP Health Care will refund $1.3 million to subscribers for overcharging them on their insurance premiums in 2010.

MVP was one of 11 insurance companies in New York required to repay $114.5 million under a state law that penalizes them should they spend less than 82 cents of every premium dollar on providing health care. Gov. Andrew Cuomo announced the refunds Wednesday.

Other Capital Region-based insurance companies required to issue refunds are:

* CDPHP: $487,768

* Empire Plan and Blue Shield Community Blue: $61.1 million

* HealthNow New York: $4.5 million

Gary Hughes, spokesman for MVP, said the state’s calculation is correct and that the company will refund the money, including awarding a portion to CompCare, a state-mandated individual HMO plan.

Hughes said the refund affects a “relatively small” group of subscribers to MVP’s large group, community rated HMO product. This product covers groups of 51 or more subscribers.

Hughes, however, said MVP believes the state law needs to be changed because of its narrow focus. “We believe that we actually undercharged for our fully insured, commercial lines of business in 2010 in most areas other than large group, community rated HMO, and that the regulation should look at an insurers’ total book of commercial business.”

The $1.3 million refund will come from the $3 billion in profit MVP made in 2010, Hughes said.

The state said approximately $44.7 million of the refund total are to policies that apply to the large group market, affecting approximately 141,829 members.

The state regulation requires that insurers spend at least 82 cents of every dollar collected in premiums on providing health care. If the amount spent on care, known as the medical loss ration, or MLR, is less than 82 percent, insurers are required to refund the difference to policyholders, according to a news release from the state Department of Financial Services. “The purpose of this requirement is to encourage health insurers to operate as efficiently as possible so that most premium dollars go to providing medical care. The amount of the 82 percent mark goes to insurer overhead, administrative expenses and profit,” the release said.

Hughes said the plan in question had a MLR of 81.5 percent.

The state has instructed insurers to make refunds to affected policyholders in the large group market by Dec. 15.

Cuomo and Financial Services Superintendent Benjamin Lawsky also on Wednesday announced that rate filings by health insurers will be made public. Insurers had challenged the requirement, but have since withdrawn their objections to the public release of this information by the state. The state said releasing the information will help protect consumers and promote competition.