I am writing today to announce the closure of the New Mexico Independent. After three and a half years of operation in New Mexico, the board of the American Independent News Network, has decided to shift publication of its news…
While environmental activists played their part yesterday during demonstrations at the capitol building, going so far as to dress up as solar panels and to sing the tune of “You Are My Sunshine,” their counterparts, the anti-cap-and-trade contingency who has…
Roughly one quarter of University of New Mexico students are unimpressed with the state’s flagship public school, according to a survey that questioned college students about their higher education experiences.
Blue Cross and Blue Shield health insurance plans across the U.S. have raised policyholders’ rates while accumulating billions of dollars in surpluses – much more than necessary to protect the companies, according to a Consumers Union study released Thursday.
Theresa Becenti-Aguilar‘s top priority on the Public Regulation Commission (PRC) will be empowering PRC employees, she told staffers this week — but protecting consumers will be a close second, she said.
The Insurance Division’s negotiation of a controversial…
A planned public hearing on Blue Cross and Blue Shield of New Mexico‘s controversial health insurance rate hike may be delayed until September.
The company filed a motion July 2 with the state Insurance Division, saying the public hearing and division review of the rate hike should be delayed until the Supreme Court has ruled on the matter, because preparing for the public hearing would be time consuming and the court may toss the PRC’s decision to reverse approval of the hike. More …
Blue Cross Blue Shield has asked the state Supreme Court to block the PRC’s decision to suspend a controversial 21 percent health insurance rate hike. The company says it complied with all regulations in pursuing the rate hike and negotiated with the Attorney General’s office and Insurance Division in good faith to arrive at the settlement. That settlement came after the state’s expert concluded the rate hike was unjustified and the company had “inflated” its losses.
Insurance Division officials fired former compliance director Aaron Feliciano after he refused to hire an unqualified candidate as chief investigator and complained to the Attorney General’s office about “unlawful or improper” acts by Division officials, Feliciano alleges in a…
The state Insurance Division will this week vacate its controversial April approval of a Blue Cross Blue Shield of New Mexico health insurance rate hike settlement, Public Regulation Commission (PRC) chairman David King told The Independent Monday morning.
The move expected this week does not represent a formal rejection of the request or a final decision; it will simply restart the process.
Commissioner Jason Marks had condemned the settlement as “a back room deal.” Angry commissioners voted May 13 to order the Division to reverse its approval of the settlement, which was negotiated over a weekend without public hearings.
But former acting superintendent Tom Rushton, who had helped negotiate the 21.3 percent rate hike, resigned the following day without issuing an order to vacate the agreement.
Rushton was replaced May 20 by Craig Dunbar, who could not vacate the agreement because a technicality prevented him from staying in the job; State law requires the insurance superintendent to have lived in New Mexico for three years, but Dunbar returned to New Mexico from Texas only last year.
Blue Cross Blue Shield attorneys had threatened to sue the PRC if the Division withdrew its approval for the rate hike. But concerned that Dunbar’s appointment might be challenged in court if he vacated the rate hike, because of the residency issue, commissioners decided to replace him, they told The Independent.
Dunbar was replaced last week by Johnny Montoya
Incoming interim superintendent Johnny Montoya will vacate the Division’s approval this week, Dunbar and King said.
If that happens, the division will also clear a separate request to reverse the approval submitted by the original complainant in the case, Blue Cross Blue Shield NM policyholder and Albuquerque Attorney Jody Neal-Post. Jones defected from the settlement agreement May 27.
Describing Blue Cross Blue Shield as “a corporation with apparently endless litigation resources,” Neal-Post noted in a filing submitted to the Division Monday that the company had hired yet another attorney to fight her request that the settlement approval be vacated.
The PRC’s selection committee will begin reviewing candidates Tuesday for the permanent superintendent, King said. A “permanent” superintendent should be appointed by late summer, King said.
King questioned the constitutionality of residency requirements, noting that “many” candidates for the permanent superintendent position could not apply because they had not lived in New Mexico during the past three years.
In the latest round of what one commissioner described as “musical chairs” at the state Insurance Division, acting superintendent Craig Dunbar was replaced Thursday.
The Public Regulation Commission (PRC) unanimously appointed Johnny Montoya as the new acting…
Interim state Insurance Superintendent Craig Dunbar will be asked to step down Thursday, following inquiries by The Independent regarding Dunbar’s residential history, PRC Chairman David King confirmed Wednesday.
State law requires insurance superintendents to have been New Mexico…
Michael A. Rivera of Corrales has been appointed as the state Public Regulation Commission (PRC)’s new Chief of Staff. Rivera will oversee a PRC staff of more than 270 employees. His position pays $130,000 a year.
Rivera arrives at the…
The Attorney General’s office cannot say whether or not it received all of the financial records it demanded from Blue Cross Blue Shield of New Mexico before signing off on a controversial April 26 rate hike settlement, according to spokesman Phillip Sisneros.
The company did not disclose financial records to the PRC Insurance Division supporting figures in its rate hike application, The Independent reported. More …
The Blue Cross Blue Shield New Mexico health insurance policyholder who signed off on last month’s controversial rate hike settlement, has asked the state Insurance Division to reverse its approval of that deal.
Jody Neal-Post submitted a…
Blue Cross Blue Shield of New Mexico did not provide the state Insurance Division with documentation for financial losses and expense figures cited as justification for last month’s controversial health insurance rate hike, Public Regulatory Commission (PRC) records show.
The company’s defense for failing to back up their figures with supporting evidence? Regulators did not ask for any.
Insurance Division staff have not required Blue Cross Blue Shield NM, or other health insurers, to submit documentation supporting rate increase requests, Blue Cross Blue Shield officials said, leading PRC Commissioner Jason Marks to describe the Division’s regulatory culture as “insufficiently skeptical.”
Rate hike application ‘not properly documented’
When the Attorney General’s office hired award-winning insurance rate analyst and former New Jersey insurance regulator Allan I. Schwartz as an independent expert to review Blue Cross Blue Shield’s rate hike filing, he reported that supporting documentation for most of the figures cited by the company was missing. And what little data was available, Schwartz concluded, contradicted the company’s claims.
The company’s requested rate hike was not justified, he concluded.
“The BCBSNM rate filing was not properly documented and supported,” Schwartz said in testimony to the Insurance Division March 2. “The filing did not provide sufficient documentation regarding numerous aspects of the BCBSNM rate calculation … Hence, the filing does not provide reasonable actuarial support for the proposed rate changes.”
Approving the rate hike would “continue a pattern of large rate increases for New Mexico health insurance consumers,” Schwartz cautioned, making it “increasingly difficult” for New Mexicans to afford individual health insurance.
The company presented numerous complex economic expense and loss indicators — variables such as “duration adjustments,” “deterioration adjustments,” and “annual deductible leverage.”
These figures were used to calculate an “Indicated Rate Change.”
Data presented contradicted BCBS claims
But the figures may have been smoke and mirrors, Schwartz suggested.
“The problem with the BCBSNM filing is that none of these various components … were documented or supported,” he said.
Where data was available, it contradicted Blue Cross Blue Shield’s claims, Schwartz found.
The “annual base trend” is an estimate of past financial losses. It is used to adjust projected future revenues from individual insurance policy premiums.
Schwartz calculated the company’s actual yearly loss trends on individual-market insurance policies over the past seven years and found they had varied between 4 and 8 percent — well below the 10 percent a year claimed by Blue Cross Blue Shield.
“Based upon this analysis, the loss values used in the BCBSNM rate filing are inflated and result in an excessive rate indication,” Schwartz said.
The Insurance Division and Attorney General’s office staff nevertheless negotiated a weekend rate settlement deal to raise Blue Cross Blue Shield rates by 21.3 percent for approximately 40,000 New Mexicans, without a public hearing that had been ordered by PRC commissioners. Former state insurance superintendent Morris “Mo” Chavez resigned in the face of outrage over the deal expressed by policyholders and PRC commissioners. Interim superintendent Tom Rushton, who helped negotiate the deal, subsequently resigned after PRC commissioners voted to direct him to vacate Chavez’s approval of the rate hike.
Parent company had surplus of $6.7 billion
Last month’s rate hike was just the latest of many, The Independent found. The Insurance Division had approved Blue Cross Blue Shield rate hikes every year since 2004, PRC documents show.
Blue Cross Blue Shield NM officials and former state insurance superintendent Morris “Mo” Chavez repeatedly raised the specter of the insurer’s solvency and financial losses. But asked about the financial condition of the insurer’s parent company, Health Care Service Corporation, Schwartz painted a very different picture, testifying the firm “has a strong financial position.”
“At year-end 2009, Health Care Services Corporation had a surplus of about $6.7 billion,” Schwartz testified, citing the corporation’s annual report.
In each year since 2004, the Insurance Division approved Blue Cross Blue Shield NM rate hikes. But for each year since 2005, Schwartz found, Health Care Service Corporation had a net income of at least $500 million, for a total net income of $4.4 billion.
Health Care Services Corporation’s net income last year exceeded $740 million, according to a May 25 online company profile.
Health Care Services Corporation’s annual report also showed “a much lower level of expenses” than Blue Cross Blue Shield NM claimed to the Insurance Division, Schwartz noted.
Blue Cross Blue Shield told state regulators that 26 percent of insurance premium revenues go to corporate expenses, but the parent company’s annual statement shows an 11 percent expense ratio, Schwartz said.
“While there may be an explanation for the dramatic difference in the expense ratios shown for Health Care Services Corporation as a whole and the values BCBSNM included in its filing, BCBSNM has not provided such an explanation,” Schwartz said.
Nor did the company include in their projected future losses, the savings resulting from disease prevention and wellness programs, Schwartz noted — even though those programs had explicitly been adopted to reduce policyholders’ medical claims costs.
Regulators did not request supporting documentation
Blue Cross Blue Shield did not provide supporting documentation for its claims because they were never asked to do so, according to company officials.
The Blue Cross Blue Shield rate increase filings included “everything required by the New Mexico Insurance Division,” Director of Actuarial and Underwriting Department Kevin Carr testified April 9, citing a Division checklist for rate increase filings. “We are not required by the NMID (Insurance Division) to include all of this documentation in our rate filing.”
“Based on my discussions and correspondence with the (Insurance Division) staff, they felt that our assumptions, including trend, were reasonable,” Carr testified.
Rate increase filings in New Mexico “generally do not include all of the underlying data”, Carr said. “In fact, based on my review of rate filings of other insurers in New Mexico, we generally provide much more information in our filings than most of the other insurers.”
Insurance Division staffers take insurers’ figures at face value, Carr’s testimony suggested.
For example, the 10 percent “annual base trend” figure Schwartz found to be inflated had been accepted by Insurance Division staffers even without the underlying data, Carr claimed.
“The 10 percent assumption for the annual base trend was specifically reviewed by and discussed with (Insurance Division) staff as part of the rate increase process, and they agreed that it was a reasonable assumption,” Carr said.
Insurance Division staff did not question the other figures, Carr said.
“The (regulatory) culture is insufficiently skeptical,” PRC Commissioner Jason Marks said. “On health care, the assumption is costs are just a national disaster and nothing can be done about it … that it’s unavoidable. But rates are rising faster than needed. There needs to be more skepticism, and related to that I’d like to see a different orientation. The regulator has a responsibility to make sure every penny passed on (to consumers) is required by law.”
Marks had described last month’s weekend rate hike settlement as “a back room deal,” a reference to the Insurance Division’s failure to hold public hearings.
The Division has a responsibility to confirm insurers have prudently incurred the expenses cited in rate change filings, Marks said.
“Just because there’s a cost in your accounting system doesn’t mean you accrued it responsibly and can pass it on to consumers,” Marks said.
Public Regulation Commission (PRC) Commissioner Jason Marks of Albuquerque, who is attending a two-day renewable energy transmission conference in Arizona, was “a little surprised” Thursday afternoon to learn other commissioners had appointed Craig Dunbar as the new…
PRC Chairman David King’s executive assistant, Craig Dunbar, was named the state’s new interim insurance superintendent Thursday afternoon. Among Dunbar’s first tasks will be taking over the Blue Cross and Blue Shield of New Mexico rate hike fight as its new hearing officer, King told The Independent.
Former Insurance Superintendent Don Letherer presented his case to replace Thomas R. Rushton as interim state Insurance Superintendent, at a Public Regulation Commission (PRC) meeting Tuesday morning in Santa Fe.
Letherer’s contentious relationship with previous PRC commissioners, including his 2001 firing as Insurance Superintendent and 2002 civil rights lawsuit against the PRC, were not discussed, spokesman Gerald Garner said.
Interim state Insurance Superintendent Thomas Rushton will retire effective June 22, Public Regulation Commission (PRC) Chairman David King confirmed Monday evening.
Rushton was appointed Interim Insurance Superintendent May 4, immediately upon the resignation of former superintendent Morris…
New Mexico Public Regulation Commission (PRC) commissioners Thursday morning unanimously directed Interim Insurance Superintendent Thomas Rushton to rescind the Insurance Division’s controversial approval of a 21.3 percent hike in the health insurance rates for individual policyholders of Blue Cross Blue Shield N.M.
Rushton announced that he had recused himself from further involvement in the case.
That, at least, came as welcome news to the Attorney General’s office, according to Spokesman Phillip Sisneros.
“We do support Mr. Rushton’s recusal from a hearing on the matter,” Sisneros said. “(But) our position is still in support of the settlement. Remember, our agency is not the policy making authority on this issue and in fact, we were asked to step in to help find a resolution. We are happy to continue in that advisory role in the future.”
Rushton appeared reluctant to rescind the Insurance Division’s April approval of the rate hike, telling commissioners that rate change review procedures had been followed.
“There was a hearing conducted,” Rushton said. “There was prefiled testimony. There was discovery. There was a settlement reached, and Morris Chavez accepted that stipulated settlement.”
PRC Chairman David King interrupted Rushton to say that there were outside interests that had not been heard in the rate hike settlement process.
“We’ve had death threats to the Commission, to staff, and the former superintendent (Chavez),” King said. “They certainly followed the law, but it wasn’t done as well as in California,” where a Blue Cross rate hike was recently overturned.
Rushton assigned Deputy Insurance Superintendent Darlene Gomez to be the hearing officer for the reconsideration of the settlement approval. Gomez will receive whatever staffing assistance she needs from the Commission, King pledged.
But the Insurance Division will work under close Commission scrutiny, King said. King said the Commission will also ask for a third-party independent audit of Blue Cross Blue Shield NM’s financial records.
Commissioners King, Jason Marks, and Jerome Block, Jr. have all said they want the PRC to investigate why Blue Cross Blue Shield has a virtual monopoly in much of rural New Mexico.
Marks and Block appeared to try to manage policyholders’ expectations, Thursday.
“I don’t want false hope here,” Marks said. “It’s only right to do what we can. But we don’t want false hope. There’s still a stipulated settlement.”
Block said Blue Cross Blue Shield was starting “from scratch,” as far as he was concerned.
But he cautioned that the company would not take the Commission’s decision lightly, and warned policyholders that the extra scrutiny could backfire on consumers.
“They’re going to come out swinging,” Block said. “There could be (financial) data that justifies a higher increase. I hope the public is ready to face that outcome if it’s substantially different.”
Switching interim superintendents?
Marks also floated the possibility of replacing Rushton as interim superintendent with former insurance superintendent Don Letherer, noting that Rushton is very busy.
“Don could keep the wheels on,” Marks said. “We’d have twice the assurance the job’s getting done.”
Commissioners agreed to add a meeting with Letherer to next week’s Commission agenda.
Insurance Superintendent Morris Chavez
State Insurance Superintendent Morris Chavez resigned Tuesday morning, following intense criticism for his approval last month of a 21.3 percent rate increase for Blue Cross Blue Shield New Mexico individual policyholders without any public hearings.
But last month’s contentious rate hike was nothing new.
The state Public Regulation Commission (PRC)’s Insurance Division has approved rate increases for Blue Cross Blue Shield individual health insurance policies every year since 2004, according to state Insurance Division documents obtained by The Independent.
The Independent sought comment from Chavez Tuesday morning, only to learn staff was scrambling to announce his resignation.
In several cases, the rate hikes were comparable to this year’s increase, exceeding 20 percent.
Cumulatively, the increases approved each year since 2004 have pushed up premiums for Blue Cross Blue Shield NM policyholders by as much as 154 percent, Insurance Division records show.
In 2009 alone, rate increases for the company’s Blue Choice and Blue Choice Plus policies increased 19.6 percent and 24 percent, respectively. The company’s NM Major Medical policies saw a 2009 rate increase of 24.7 percent and Number One policy rates increased 22 percent in 2009.
The financial impact of rate increases on policyholders can be profound, policyholders told The Independent.
Moya Melody and her husband Kim Radsliff, Santa Fe residents, now spend 30 percent of their income on their Blue Cross Blue Shield NM policy, Melody said.
Last month’s rate increase brought their montly premiums up to $1,305 a month, Melody said. When they first bought their Blue Cross Blue Shield NM policy in 2004, they paid $562, or 16 percent of their household income, Melody said.
Two PRC commissioners want more transparency
Health insurance rate increases have not been contested before in New Mexico, PRC Commissioner Jason Marks told The Independent.
“The only insurance rate increase appealed … in the past decade was an appeal two years ago over title insurance,” Marks said.
PRC Commissioners knew about the 20 percent Blue Cross rate increase in 2009, but had not been aware that the Insurance Division had routinely approved rate increases since 2004, Marks said.
“We knew about the 20 percent (Blue Cross) rate increase last year, but this 150 percent increase (since 2004) is news to me,” Marks said.
In the future, health insurance rate increases exceeding 10 percent should trigger public hearings and full Commission review, Marks said.
Commissioner Jerome Block Jr. agreed.
“It’s unfortunate the Insurance Division has treated rate increases as a routine or typical process,” Block told The Independent. “These aren’t typical times. New Mexicans are struggling. I’d like to see the 10 percent threshold serve as a red flag for public hearings and Commission review.”
The Commission also needs to investigate why Blue Cross Blue Shield NM is the only individual health insurance provider in much of rural New Mexico, Marks said.
Blue Cross Blue Shield NM spokeswoman Becky Kenny did not respond to repeated requests for comment on the rate increases. Nor did Kenny respond to requests for information regarding executive salaries.
Kenny refused to disclose the Blue Cross Blue Shield NM’s tax filings, and would not say whether or not the not-for-profit would provide tax filings to policyholders. Blue Cross Blue Shield NM is a division of Health Care Service Corporation (HCSC), a mutual insurance company that is owned by its customers. Profits must be reinvested in the business or given to customers.
HCSC’s chief executive officer was paid $10.6 million in salary and bonuses in 2008, according to documents filed with the Insurance Division by Consumers Union attorney Sondra Roberto.
Public Regulation Commission member Carol K. Sloan will return to work Tuesday to attend the regular Commission meeting, Sloan’s executive assistant Luis Ledezma told The Independent.
Sloan was convicted in state District Court April 8 of felony aggravated…
