The information that health insurers use to ask the state for permission to raise rates will be subject to the scrutiny of auditors, the New York State Department of Financial Services (DFS) said.
The department plans to audit rate requests for health-insurance plans that are regulated by the state, including plans sold to small businesses and individuals. It will review data about claims, administrative expenses, and premiums.
“These in-depth audits will allow us to drill down underneath the numbers to make sure they are accurate,” DFS Superintendent Benjamin Lawsky said in a news release. “For example, we can look at whether insurers are accurately allocating administrative costs and broker commissions.”
DFS will perform the audits on rate requests after insurers file them. Insurers will not know ahead of time whether a request is slated for auditing.
The department intends to hire a private accounting firm to help its own staff scrutinize the rate requests. It is funding the audits using a $4.4 million grant from the U.S. Department of Health and Human Services.
DFS must approve health insurers’ rate requests under a 2010 prior-approval law. Insurers asked to raise rates by a weighted average of 12.7 percent for 2012, but the department approved increases of 8.2 percent.
Contact Seltzer at rseltzer@cnybj.com