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State, insurer reach rate settlement

Neighborhood Health can hike premiums 7.7%

By Robert Weisman
Globe Staff / June 5, 2010

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The state Division of Insurance has reached a settlement with Neighborhood Health Plan, allowing the Boston insurer to boost its base premium rates by 7.7 percent for small businesses and individuals.

Neighborhood Health was one of six insurers challenging the Patrick administration’s denial of proposed double-digit rate hikes that would have taken effect April 1. The settlement, disclosed yesterday, halts Neighborhood Health’s administrative appeal and removes it from participation in the insurers’ lawsuit filed in Suffolk Superior Court.

State regulators said that while the settlement was specific to Neighborhood Health, they would be willing to talk to other health insurers about reaching agreements that could end the two-month-old standoff over escalating premium costs.

“I’m optimistic that other carriers will see that we’re reasonable people and we very much want to work together with them,’’ said Insurance Commissioner Joseph G. Murphy. “We’re aggressively trying to provide relief to small businesses. But my door is open and I welcome continuing dialogue with other insurance carriers.’’

Under the settlement with Neighborhood Health, thousands of individuals and small companies that buy the insurer’s commercial offerings through 19 separate plans will pay 7.7 percent more through this year. The settlement applies only to some of its commercial policies, not to members who get their insurance through government plans.

State officials on April 1 had approved proposed rate increases of 6.9 percent for 15 of the plans, but rejected proposed increases of 11 percent for the other four. The settlement disclosed yesterday was “appropriate for this carrier and their book of business,’’ Murphy said.

It’s not clear whether the deal will set a pattern for other insurers still at loggerheads with the state.

Neighborhood Health is the state’s fourth-largest health insurer, after Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim Health Care, and Tufts Health Plan. Of its 200,000 members, however, 170,000 are covered through Medicaid or Commonwealth Care, government-financed plans that serve low-income populations and many formerly uninsured residents who were required to buy insurance under the state’s 2006 health care law.

“We recognize the importance of offering reasonable competitive prices,’’ said Neighborhood Health spokeswoman Rhian Gregory. “Ultimately, the proposed settlement terms worked for us financially in the context of our overall business portfolio.’’

In a statement, Governor Deval Patrick applauded the settlement. “I appreciate the willingness of Neighborhood Health Plan to work with us to provide immediate relief from skyrocketing premiums,’’ he said, “and hope they will be an example to other health plans as well.’’

Fallon Community Health Plan and Health New England are going forward with appeals, along with Blue Cross Blue Shield, Harvard Pilgrim, and Tufts. Superior Court Judge Stephen E. Neel turned down their request for a preliminary injunction that would have let them charge the denied rates, asking them to exhaust administrative hearings within the insurance division before the case goes to trial. Those hearings have been taking place for the past month.

The first appeal ruling, on the one filed by Harvard Pilgrim, is expected by July 1. That’s around when the state will rule on proposed double-digit rate hikes for small businesses and individuals on policies that renew between July and September.

Robert Weisman can be reached at weisman@globe.com.

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