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California Dept. of Managed Care Asks Blue Shield to Bring in Their Costing Algorithms for Last Round of Premium Increases

Posted Apr 20 2011 7:59pm

This is a unique deal here in California with 2 regulatory agencies so the HMO contracts come under the Managed Care Office while other plans that are not HMOs come under the Department of Insurance.  This has been presented to the governor with a proposal to merge these 2.  Just a few days ago the Blue Cross folks were image going to get some big premium increases for private policies where the other policy holders were not so it looks like we might have something similar going on here with Blue Shield. 

Insurers live and die with the use of both their own internal algorithms and those they contract with 3rd parties such as this case in the northeast last week where stress tests were not being allowed when they should have been. 

Back in 2009 I said we need a Department of Algorithms as we go through all the trouble and time to certify the medical record vendors for all their information and interfaces for billing to work correctly, so why do we not certify the formulas the payers use…real good question and it would certainly free some of time up for the judges who so often end up interpreting so many of these cases. 

“Department of Algorithms – Do We Need One of These to Regulate Upcoming Laws?

The California agency that oversees HMOs has asked Blue Shield of California to explain rate increases for about 70,000 members covered by individual plans.

The California Department of Managed Health Care said not-for-profit Blue Shield of California raised rates on average by 37.5%. The increase included an 18.8% hike that went into effect in January, and a 15.8% increase effective Oct. 1, 2010, according to the agency.


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