Anthem Blue Cross To Withdraw Planned Rate Hikes, Could Refile Soon

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On Thursday, WellPoint officials announced that the company's subsidiary, Anthem Blue Cross of California, has withdrawn its request to raise premium rates for individual policyholders by as much as 39%, the Los Angeles Times reports.

The increase would have taken effect on Saturday and affected as many as 800,000 of Anthem's customers. California Insurance Commissioner Steve Poizner (R) confirmed the company's decision (Helfand, Los Angeles Times, 4/30).

Background

In February, Poizner WellPoint to delay the rate hike, which originally would have taken effect on March 1.

Anthem officials later said they would delay the rate hike until May 1, pending the findings of an investigation by external actuaries hired by Poizner, the Sacramento Bee reports.

Report Pending

Although the complete report is expected to be released as soon as Tuesday, Poizner released a summary of the findings on Thursday (Caina Calvan, Sacramento Bee, 4/30).

Poizner said the actuarial firm had found "multiple, significant errors" with Anthem's proposal, including its calculations of medical claims trends (Wilde Mathews, Wall Street Journal, 4/30).

The report -- conducted by the actuarial consulting firm Axene Health Partners -- found that among other errors, Anthem overstated medical costs by raising the effect of aging. The actuaries found that modifying those numbers could lower the average rate hike by 10.2% (Los Angeles Times, 4/30).

Those errors "would have led to massive and unjustified rate increases," Poizner said, adding that Anthem was notified about the errors "and they admitted to the mistakes" (Sacramento Bee, 4/30).

Poizner said the actuaries' report likely played a key role in Anthem's decision to withdraw its request (Wall Street Journal, 4/30). However, Anthem did not make any reference to the report in its announcement (Los Angeles Times, 4/30).

Anthem Plans To File New Rate Proposal

On Thursday Anthem officials acknowledged that the company is considering filing a new rate proposal as early as next month, but no specific timeline was disclosed.

The new filing would reflect "updated and real-time medical utilization information and address inadvertent miscalculations related to the way in which we estimated our future medical costs in our initial filings," the officials said (Sacramento Bee, 4/30).

The new rate request also would comply with the latest federal standards outlined in the new health reform law, Anthem officials said (Wall Street Journal, 4/30). One of those standards, set to take effect on Jan. 1, 2011, requires insurers to spend at least 80% of collected premiums on medical care (Sacramento Bee, 4/30).

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